When Level 3 Communications (LVLT) entered into a definitive agreement under which Level 3 Communications would acquire Global Crossing in a tax-free, stock-for-stock transaction on April 11, 2011, expectations were high. The stock jumped 18% to a split adjusted $25.5 on the announcement. The stock went on to touch $40.00 in July.
LVLT has been bleeding cash its entire history (see below), accumulated massive debt (over $8 billion today) and have not been able to grow the top line organically. The acquisition sparked hopes that LVLT would now have enough mass to turn things around and kick start top line growth. Past acquisitions have proved problematic but this time would be different.
LVLT completed the acquisition of Global Crossing on October 4, 2011, and announced plans to transfer the listing of its common stock to the New York Stock Exchange, which occurred on October 20. In conjunction with listing on NYSE, the company affected a 1-for-15 reverse stock split of the Level 3 common stock. ……. Read the full article at SA