tw telecom inc.NASDAQ
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.