XO Backs Off, Supports Level 3/Global Crossing Deal

August 5th, 2011 by · 11 Comments

Several weeks ago, XO Holdings (news, filings) announced its vehement opposition to the pending merger of Level 3 and Global Crossing, citing the combined entity's likely outsized influence on the IP transit marketplace.  Today however, according to this joint filing with the FCC, XO no longer objects. Here's the text of the letter:

Level 3 Communications, Inc. ("Level 3") and XO Communications, LLC ("XO") write to inform the Commission that they have reached an agreement that addresses all of XO's concerns raised in its comments to the Commission about Level 3's acquisition of Global Crossing Limited in the above-referenced proceeding. As a result, XO believes that the transaction is in the public interest and should be approved by the Commission.

My, that was fast. While I'm sure they will never tell us, my guess remains that XO's real aim here was some change to their peering agreement with Level 3.  And I'm guessing that they in fact managed to get enough of what they wanted to call off the dogs.  Why? Because, frankly, a few peering details with XO are probably not material to Level 3's overall results, and the smooth closing of the Global Crossing most certainly is.  On the other hand, it's just a guess on my part -- I don't actually know anything here... 🙂

There is still the DOJ second request to deal with, but Level 3 and Global Crossing are quite obviously out there crossing t's, dotting i's, and lining up ducks 24 hours a day to make the merger happen.  They added two more pieces to the puzzle in the past few days.  On Wednesday, they lined up the remainder of the funding in the form of a$650M expansion of their existing credit facility.  And yesterday both companies' shareholders voted in favor of the merger.

Categories: Government Regulations · Internet Backbones · Mergers and Acquisitions

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11 Comments So Far


  • Frank Freyers says:

    Big surprise here. Not really.

  • carlk says:

    Rob, you have two very valuable participants in your tool shed who appear from behind their curtains every now and then, offering all kinds of golden nuggets in the case of LVLT and xoHO.

    This is not to dis your other board members who add value, it’s just I have been reading the thinking processes of these two for a long time now, and they are sharpies!

    Todd gave us this nugget earlier in the day while being tied into the FCC site.

    My other friend, who doesn’t believe in God per se, but has in some strange way grown to like me in spite of our back and forth battles from time to time, remains in hiding.

    He’s an extremely bright one, and I would certainly like to hear what he thinks about what this private arrangement xoHO news might mean, not that yours isn’t entirely spot on.

    It should be no surprise that he believes ICON is still getting away dirt cheap at $1.40 pps!

  • fluids_only says:

    Agree. Can’t imagine that LVLT would have to have paid XO off too much, and they would have been able to calculate pretty accurately the value of the time saved. It was one of the Latam countries last time that held up the approvals, so clearly the regulatory teams would have flagged that one and directed particular attention there. Otherwise, it really is hard to see how the is merger would have much of an anti-competitive effect anywhere. It would be great to see this merger closed sometime in Q3 and see how well they can get the integration done this time. I am optimistic and frankly, with all the investor attention, the interest of GBLX’s owners and the comparative simplicity of this deal, it is difficult to imagine that they would stuff this one up. The synergies should fall to the bottom line quickly.

  • Equitable Estople says:

    Smart move potentially on XO’s part. Everyone knows they don’t have the critical mass to have settlement free peering with GC and LVLT so they petition and object to the merger then get the LVLT folks to acquiesce on charges to give XO settlement free peering. Nicely done I hope. Only problem is that the scenario would mean Heather Gold who si the SVP of Regulatory Affairs at XO planned this….frankly she’s an idiot so its probable she didn’t and XO didn’t get what they wanted. Oh well the saga continues.

  • Anon says:

    Who really cares? Right now XO is about as popular as Casey Anthony at a Chuck E Chesse….

  • L.R.Hubbard says:

    Sadly XO could be great except the BOD appears to be inept, the leadership except a select few are inept, and the majority of employees are quite capable ….. In the end I guess none of this really matters as icahn is the only person capable of fixing the issues. For a corporate raider who is supposed to turn companies around this is the antithesis of his supposed objectives.

  • Anon says:

    to the contrary, he has acheived his objective with almost perfect efficiency: it is a tax shelter for other profitable endeavors. only peeps on this board seem to be confused about the phone company thing

  • Mr. Poppers says:

    @Anon ….well said. Period.

  • jjl says:

    Gossip says XO agreed to merge LVLT
    2 strikes with one ball!!!!
    Well played Mr Icahn!!!!!

  • Mr. Poppers says:

    No chance.

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