Focus Equity • 61 Comments
Wed, Aug. 17, 11:50 AM
- Privately held Lightower Fiber Networks is exploring a sale that will draw interest from infrastructure rivals including Level 3 Communications (LVLT -1.3%) and possibly Zayo Group (ZAYO -0.6%), CTFN reports.
- A source says Lightower could be counting on scarce assets to drive its valuation up to 13-14 times EBITDA from a more typical 10-11 times. That would mean if EBITDA were $400M, as the source estimates, the company's valued between $4B and $5.6B.
- Berkshire Partners bought the firm and merged it with Sidera for $2B in 2013.
Wed, Jul. 13, 6:43 PM
- Level 3 Communications (NYSE:LVLT) closed today up 3.5% after touching a 52-week high on news that it's looking into strategic alternatives -- which could include a buyer from outside telecom.
- Comcast (NASDAQ:CMCSA) is speculated to be a possibility among suitors, but so is Google (GOOG, GOOGL), with whom Level 3 signed an interconnection agreement earlier this year.
- Citigroup analysts Michael Rollins and Neth Wiedemann can't confirm the reports, but they love the stock ("top pick within our coverage group given its growth, financial flexibility, valuation, and strategic optionality") and float another candidate: rival Zayo Group (NYSE:ZAYO).
- Zayo could itself be an attractive target for a cableco, but "We also would not dismiss the possibility that Level 3 and Zayo could consider a merger scenario to become a larger competitor for the enterprise market against the incumbents AT&T and Verizon Communications."
Jul. 1, 2015, 2:34 PM
- Level 3 (LVLT +0.3%) has acquired private software company Black Lotus for all cash, in a move to shore up security capabilities.
- Black Lotus provides defenses against "distributed denial of service" attacks on networks, and will add proxy-based mitigation to Level 3's existing solution launched earlier this year -- which included extra scrubbing centers.
Jun. 22, 2015, 12:32 PM
- A combo of Level 3 Communications (LVLT +1.1%) with Limelight Networks (LLNW +0.8%) would create a strong content-delivery rival to Akamai, figures Macquarie's Kevin Smithen.
- Verizon had passed on buying Limelight, choosing instead to go for EdgeCast 1.5 years ago to add 6K customers to its own content-delivery business. But Akamai could see real competition from a "credible second source" of a Level 3/Limelight combo.
- "We continue to believe that value will be created over the long term, either by organic margin expansion driven by 15% to 20% CDN industry revenue growth over the next few years, or by what we feel is a logical combination of Limelight with Level 3's CDN business," Smithen says.
Nov. 4, 2014, 8:18 AM
Jun. 16, 2014, 7:08 PM
- "TWTC has a very dense fiber metro base, and I think combined with LVLT domestic and international long-haul routes, the company will be able to deliver a new level of fiber connectivity around the world," says Stephens' Barry McCarver, offering an upbeat view of the Level 3 (LVLT -4.1%)/TW Telecom (TWTC +7.3%) deal.
- But others on the Street weren't as thrilled about the price, which at announcement time represented a 26% premium to where TW closed on Thursday, before a BrightWire report about Level 3's interest arrived.
- Light Reading's Carol Wilson notes the deal significantly boosts Level 3's enterprise/Ethernet reach, and that TW has a stellar reputation. "Twice in the past year I've had executives from tw telecom competitors volunteer the fact that they purposely avoid going head-to-head with that particular service provider."
- Level 3 is offering $10 in cash and 0.7 shares for each TW share. The company has already lined up $3B in financing; it had $7.8B in net debt at the end of Q1.
- Level 3 expects $240M/year in cost synergies ($200M adjusted EBITDA, $40M capex), and sees $170M in integration costs. TW shareholders will own 29% of the merged company. TW CEO Larissa Herda will be stepping down once the deal closes in Q4.
Jun. 16, 2014, 7:50 AM
- Level 3 Communications (LVLT) agrees to acquire TW Telecom (TWTC) in a stock and cash deal valued at ~$7.3B, including ~$1.6B of net debt ($40.86/share); trading is halted for both.
- TWTC has long been considered a takeover candidate, owing to its strength in the data space.
- LVLT expects the acquisition to be accretive to free cash flow/share after the first year.
Jun. 12, 2014, 6:57 PM
- Level 3 (LVLT) is "intensifying talks with TW Telecom (TWTC) about a possible acquisition," though no deal is imminent, sources tell BrightWire.
- TW (current market cap of $4.5B) has a large nationwide fiber network (connects 20K+ commercial buildings) that would bolster Level 3's own network, and bills itself of the top 3 U.S. business Ethernet providers. Both companies are based out of Colorado.
- BrightWire states Level 3 was also interested in TW back in 2012, when the company (per reports) hired Evercore to explore its options. But Level 3 is in much better shape today to make a bid.
- Speculation that Level 3 could bid for TW has been around for a while.
May 28, 2013, 12:00 PM
Limelight (LLNW +6.3%) "is in talks to try and sell the company to Verizon (VZ) and is desperate to make a deal," Dan Rayburn reports hearing from "multiple attendees from Wall Street" at a conference he hosted. With Limelight burning cash and facing tough competition from Akamai (AKAM) and Level 3 (LVLT), there's logic to exploring a sale. Rayburn points out Limelight's management changes and Verizon's interest in growing its CDN business could lead to a deal. However, he adds Limelight has been seeing employee defections, and has heard Limelight customers criticize the "poor performance" of its CDN. Private XO Communications is also said to be talking with Limelight.| May 28, 2013, 12:00 PM | 2 Comments
Sep. 30, 2011, 9:27 AM
Level 3 Communications (LVLT) says both the FCC and the Justice Department have signed off on its buyout of Global Crossing; it expects the transaction to be completed as early as next week. LVLT +4% premarket.| Sep. 30, 2011, 9:27 AM | 2 Comments
Aug. 30, 2011, 8:01 AM
Limelight Networks (LLNW) soars 9.3% after announcing it will sell its EyeWonder online advertising unit to DG (DGIT) for $66M in cash - money the company can definitely use, given its rate of cash burn. Dan Rayburn had reported that Limelight was looking to sell EyeWonder, and perhaps merge its content delivery network (CDN) assets with Level 3's (LVLT) CDN business.| Aug. 30, 2011, 8:01 AM | 1 Comment
Aug. 16, 2011, 2:36 PM
Quick take on Limelight/Level 3: With Limelight bleeding cash, undercut by Level 3 on pricing, and incapable of generating the margins seen by market leader Akamai (AKAM) on value-added services, a merger with Level 3 is probably a smart move. Of course, the deal would only worsen Akamai's woes in the low-margin media delivery space.| Aug. 16, 2011, 2:36 PM | 2 Comments
Aug. 16, 2011, 2:35 PM
Online video analyst Dan Rayburn claims Limelight Networks (LLNW), which was recently hammered after reporting Q2 results, has been in talks about merging its content delivery network (CDN) business with Level 3's (LVLT) CDN operations, and simultaneously selling its EyeWonder online ad business. (previously)| Aug. 16, 2011, 2:35 PM