Just a week shy of the 6 month anniversary of the original announcement, Level 3 has closed its purchase of Global Crossing. The combined company had $6.2B in revenue and $1.3B in EBITDA pro forma (before synergies) for 2010, and they still anticipate $300M in opex savings from synergies. It will have 165,000 route miles of fiber, 30,000 being in the metro, and a presence in 45 countries.
The company intends to operate in three segments, North America, Latin America, and EMEA. In other words, some back of the envelope estimation says that GC Impsat will be left mostly alone and contributes something in the neighborhood of $600M in revenue. GCUK will be merged together with Level 3's European business plus Global Crossing's continental European business and probably add up to $900M in revenue. And the rest, $4.7B or so, will come from North America.
Level 3 also finally made its reverse split move, after several years of keeping the possibility in their back pocket. The company will be moving to the NYSE on October 20, and will implement a 1 for 15 stock split at the same time. Nobody likes reverse splits, but if there is a good time to have one then it is during a transformational acquisition. After the split, yesterday's $1.41 close translates to a stock price of $21.15. That will take some getting used to.
As part of the closing, Level 3 will be paying off $1.35B of Global Crossing's debt, including the $430M of GCUK notes, in early November. Level 3 managed to raise all the money they need for that refinancing and then some over the summer at attractive rates.
While there were some regulatory hoops to jump through, the timing of this close was pretty routine - it neither took until the end of the year nor did they breeze through it in three months. Now the hard work begins though. The integration seems likely to be much smoother than the ones that tripped up the company in 2007-2008, as it is primarily backbone assets that overlap - and known ones at that. Global Crossing's US backbone is built mainly on 24 fibers on the original Qwest buildout, which is the same as that of Genuity which Level 3 bought back in 2003.
Still on tap this month will be Level 3's Q3 earnings report, which I'm guessing will be a bit later than usual due to all the other stuff going on. But those numbers will be pre-GLBC, so the only question is what sort of growth momentum they entered the integration with.
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