Level 3 to Buy Broadwing for $1.4B


Internet-backbone provider Level 3 Communications announced plans Tuesday to acquire Broadwing, an optical-networking-services provider, in a cash-and-stock deal worth about $1.4 billion.

Austin, Texas-based Broadwing owns a 19,000-mile intercity fiber-optic network, over which it provides data, voice and media services to enterprises and service providers. Level 3, based in Broomfield, Colo., owns approximately 23,000 miles of fiber-optic network around the world and offers Internet-protocol-networking services, colocation services and managed-modem and voice services.

"The acquisition of Broadwing is consistent with both the Level 3 wholesale-market strategy, as well as our more recent entry into the enterprise market," Level 3 CEO James Q. Crowe said in a prepared statement.

Level 3 noted in its announcement that as of June 30, it had about $1.4 billion of cash and marketable securities on hand.

For 2005, Broadwing reported $879.1 million in revenue and a net loss of $133.4 million. Level 3 was also in the red, with $3.6 billion in sales and a net loss of $638 million last year.

The deal -- which the companies expect to close in the first quarter of 2007 -- is subject to approval by state and federal regulatory agencies, as well as Broadwing shareholders.

Level 3 was advised on the transaction by Evercore Partners, JPMorgan Chase and Merrill Lynch. The company received legal representation from Willkie Farr & Gallagher.