Level 3 Communications (NYSE: LVLT) has agreed to purchase tw telecom (NASDAQ: TWTC) for approximately $5.3 billion in cash and stock as Level 3 looks to expand its share of the telecommunications and Internet services market.
Tw telecom stockholders would receive 0.7 shares in Level 3 plus $10 cash for every tw telecom share they own at the deal’s closing, Level 3 said Monday.
Level 3 has secured a $3 billion financing commitment and expects to close the transaction in the fourth quarter of this year after regulatory and shareholder approvals have been completed.
“Tw telecom’s business model is directly aligned with Level 3’s initiatives for growth, which include building managed solutions to meet customer needs through an advanced Internet Protocol/optical network, ” said Jeff Storey, Level 3 president and CEO.
“The benefits created by this transaction deliver substantial value to both companies’ stockholders, as it accelerates our objective of driving profitable growth and strengthening free cash flow per share growth over the long term, ” Storey added.
Sunit Patel, executive vice president and chief financial officer at Level 3, estimates that the combination could yield as much as $240 million in yearly synergies.
Broomfield, Colo.-based Level 3 also seeks to deliver an integrated communication services portfolio for enterprise and government clients through the acquisition.
Bank of America Merrill Lynch and Citi served as Level 3’s financial advisers on the deal, while Willkie Farr & Gallagher LLP counseled Level 3 on the transaction’s legal matters.