Level 3 Plans to Acquire Broadwing Corp.; Is A Deal With Google In The Offing?

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Level 3 Elopes with Broadwing [Business Week]

Summary: Level 3 announced on Tuesday plans to acquire Broadwing, a telecom provider company, for $1.4 billion. The move strengthens Level 3's balance sheet as well as its bandwidth capacity. These upgrades could make it a more attractive, though also more expensive, acquisition for Google. Such a merger has been recently making the rounds on the rumor mill. Level 3's now upgraded coast-to-coast fiber optic network would help Google realize its dream of ad-supported wireless Net service for the masses, in addition to efficiently getting more YouTube into more people's homes. Last year, Level 3 sold Google $300 million worth of fiber-optic capacity. The company also sells to a number of other tech companies, including Yahoo!, Microsoft and AOL. Level 3 CEO Jim Crowe has denied the Google acquisition rumors. Analysts have suggested that in the wake of the Broadwing deal, which will be complex and will entail many integration issues, a deal with Google is unlikely any time soon.
Related links: Level 3's Acquisition of Broadwing Corp. Should Improve its Finances While Increasing Network Reach • Is Level 3 Communications Google's Next Acquisition Target? • TMCnet.com: Broadwing Deal May Signal an End to Level 3's String of Acquisitions
Potentially impacted stocks and ETFs: Stocks: Level 3 (LVLT), Broadwing Corp. (BWNG), Google (GOOG), Global Crossing (GLBC), Verizon Communications (VZ), Sprint Nextel Corporation (S), Lucent Technologies Inc. (LU) • ETFs: PowerShares Dynamic Networking (PXQ), iShares Goldman Sachs Networking Index (IGN)

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