Level 3 Communications will acquire WilTel Communications Group for 115 million shares of Level 3 common stock and $370 million cash, Level 3 and Leucadia National announced today. The acquisition combines two major U.S. backbone network providers and will include WilTel’s master services agreement with SBC Communications and its Vyvx video service business but not its outstanding debt or mortgage obligations.
The acquisition will bring 50 new markets and include 3000 new route miles of fiber optic network for Level 3, according to Kevin O’Hara, president and COO of Level 3. Both companies currently operate Internet Protocol backbone networks and serve primarily as wholesale operators, although Wiltel launched an enterprise services division earlier this year, following the negotiation of a new deal with SBC, which has been WilTel’s largest source of revenue.
Following the SBC-AT&T merger announcement, WilTel and SBC negotiated a new master services agreement, under which SBC has committed to purchase a minimum of $675 million in WilTel voice and data services, at current price levels, between now and 2009. The announcement of the Level 3 acquisition of WilTel apparently has SBC’s endorsement.
“We have had a long and mutually beneficial relationship with WilTel Communications and Leucadia National Corporation and their management teams,” said James S. Kahan, senior executive vice president of corporate development for SBC, in a prepared statement. “We are supportive of the transaction with Level 3 and look forward to working with the Level 3 team as we have on numerous occasions in the past.”
Under the terms of the deal, Leucadia retains the right to receive a $236 million termination payment from SBC as well as WilTel’s $358 million credit facility, its headquarters building and its $60 million mortage.
Level 3 does get the Vyvx subsidiary, which provides live and non-live broadcast video distribution for the media and entertainment industry, with nearly 250,000 fiber and satellite video feeds, and more than 5 million ads and promotional media content around the world each year. Vyvx had $120 million in revenue in 2004 and $59 million in revenue for the first six months of 2005.
“We recognize the importance of Vyvx's customers and are committed to ensuring they receive the highest quality service without disruption,” said O'Hara in a prepared statement. “We believe that Vyvx's expertise in transporting video combined with its strong brand and customer relationships may create some additional opportunities for Level 3 as the video transport market evolves.”
http://telephonyonline.com/broadband/news/Level3_WilTel_merger_103105/
The acquisition will bring 50 new markets and include 3000 new route miles of fiber optic network for Level 3, according to Kevin O’Hara, president and COO of Level 3. Both companies currently operate Internet Protocol backbone networks and serve primarily as wholesale operators, although Wiltel launched an enterprise services division earlier this year, following the negotiation of a new deal with SBC, which has been WilTel’s largest source of revenue.
Following the SBC-AT&T merger announcement, WilTel and SBC negotiated a new master services agreement, under which SBC has committed to purchase a minimum of $675 million in WilTel voice and data services, at current price levels, between now and 2009. The announcement of the Level 3 acquisition of WilTel apparently has SBC’s endorsement.
“We have had a long and mutually beneficial relationship with WilTel Communications and Leucadia National Corporation and their management teams,” said James S. Kahan, senior executive vice president of corporate development for SBC, in a prepared statement. “We are supportive of the transaction with Level 3 and look forward to working with the Level 3 team as we have on numerous occasions in the past.”
Under the terms of the deal, Leucadia retains the right to receive a $236 million termination payment from SBC as well as WilTel’s $358 million credit facility, its headquarters building and its $60 million mortage.
Level 3 does get the Vyvx subsidiary, which provides live and non-live broadcast video distribution for the media and entertainment industry, with nearly 250,000 fiber and satellite video feeds, and more than 5 million ads and promotional media content around the world each year. Vyvx had $120 million in revenue in 2004 and $59 million in revenue for the first six months of 2005.
“We recognize the importance of Vyvx's customers and are committed to ensuring they receive the highest quality service without disruption,” said O'Hara in a prepared statement. “We believe that Vyvx's expertise in transporting video combined with its strong brand and customer relationships may create some additional opportunities for Level 3 as the video transport market evolves.”
http://telephonyonline.com/broadband/news/Level3_WilTel_merger_103105/
