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Published July 20, 2006 at 4:43 AM
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A WHOLE NEW LEVEL
Level 3's strategy has largely been marked by scooping up companies that will enable it to save cash in the long term. Monday, June 5, the Broomfield, Colo. company announced a deal to buy Looking Glass Networks for $165 million as the company continues to expand its presence as a local telecom carrier and Level 3's acquisition spree shows no sign of leveling off. Some highlights include:
- an agreement May 1 to take TelCove Inc., a competitive local exchange carrier, or CLEC—a carrier whose network draws competition from juggernauts AT&T Inc., Verizon Communications Inc. and Qwest Communications International Inc.—for $1.2 billion with plans to roll up some other purchases into the new unit;
- plans unveiled April 14 to take ICG Communications in Colorado and Ohio markets for $163 million in cash and stock;
- taking Progress Telecom LLC in late January for $137 million in cash and stock;
- announcing plans in November to pay $680 million for WilTel Communications Group Ltd. after pursuing the company in bankruptcy three years before;
- agreeing last March to take the long distance assets of 360networks Corp. for undisclosed terms; and
- in October 2004, announcing it would take then-Sprint's wholesale dial Internet access business for $34 million cash.
Demonstrating remarkable resolve, Level 3 averted bankruptcy several years ago, despite having poured money into expensive fiber optics networks. The company took a $500 million investment from Longleaf Partners Funds Trust, Legg Mason Inc. and Warren Buffett's Berkshire Hathaway Inc. in 2002 ... and then went shopping.
Other recent moves of note:
- Level 3 said Thursday, July 20, it would sell its information technology subsidiary Software Spectrum to Insight Enterprises Inc. for $287 million
- Leve 3 unit Technology Spectrum, which had filed for an initial public offering last May, withdrew plans in February to float.
- Level 3 unhanded its IT infrastructure management outsourcing subsidiary to Infocrossing Inc. in December for nearly $84.8 million.
ALSO ON THE PROWL
- Meanwhile, regional carrier consolidation is all the rage elsewhere in the industry. In early May, TelePacific Communications announced it had agreed to take Mpower Holding Corp. for $204 million in cash, uniting some overlapping markets in the Northwest.
- In February, Rochester, N.Y.-based Choice One Communications Inc. and CTC Communications Corp. of Waltham, Mass., agreed to merge and one month later, went south, grabbing Charleston, W. Va.-based Conversant Communications Inc. in a deal the companies say creates the second largest CLEC in the country.
| Dealwatch executive summary |
The Date |
The Action |
| 10.17.06 |
Level 3 grabs Broadwing for $1.4 billion. (See related deal memo) |
| 7.20.06 |
Level 3 agrees to sell Software Spectrum to Insight Enterprises Inc. for $287 million. |
| 6.05.06 |
Level 3 unveils its plans to acquire Looking Glass Networks Inc. for $165 million in cash, stock and assumed debt. |
| 5.05.06 |
TelePacific and Mpower agree to $204 million merger. (See related deal memo) |
| 5.01.06 |
Level 3 announces plans to pay $1.2 billion for regional carrier TelCove Inc. (See related deal memo) |
| 4.17.06 |
Level 3 pays $165 million in cash and stock for ICG Communications Inc. (See related deal memo) |
| 2.10.06 |
Choice One Communications and CTC Communications Corp. agree to a $550 million merger. |
| 1.26.06 |
Progress Telecom LLC goes to Level 3 for $137 million. (See related deal memo) |
| 11.02.05 |
Level 3 agrees to pay $680 million in cash and stock for WilTel Communications Group LLC. (See related deal memo) |
| 12.01.05 |
Level 3 announces completing the sale of its iStructure subsidiary for $82.3 million. |
| 05.13.05 |
Technology Spectrum Inc., a Level 3 subsidiary, unveils plans for an initial public offering, later to be withdrawn. |
| 03.08.05 |
360networks Corp. unhands its long-distance assets to Level 3. |
| 10.01.04 |
Level 3 takes Sprint's wholesale dial Internet access unit for $34 million cash. |
| 9.04.02 |
Safe from bankruptcy, Level 3 secures a loan, goes shopping. |
Source: The Deal |
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Level 3 Communications Inc. made its largest acquisition in recent times Oct. 17, when it scooped up competitor Broadwing Corp. for $1.4 billion.
