FBR Capital Maintains a 'Market Perform' on Level 3 Communications (LVLT); Acquire Global Crossing in $3.0B All-Stock Transaction
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Price: $53.63 --0%
Rating Summary:
14 Buy, 12 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
14 Buy, 12 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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FBR Capital maintains a 'Market Perform' on Level 3 Communications (NASDAQ: LVLT).
FBR analyst says, "This morning Level 3 and Global Crossing (Nasdaq: GLBC)(Not Covered) announced a definitive agreement under which Level 3 will acquire Global Crossing in a tax-free, stock-for-stock transaction. The combined network will serve more than 50 countries and connections to more than 70 countries. This transaction will create a company with pro forma combined 2010 revenues of $6.26 billion and pro forma combined 2010 Adjusted EBITDA of $1.27 billion before $300 million in estimated synergies according to LVLT. Global Crossing shareholders will receive 16 shares of Level 3 common stock for each share of Global Crossing common stock or preferred stock that is owned at closing. Based on Level 3's closing stock price on 4/8/11, the transaction is valued at $23.04 per Global Crossing, or approximately $3.0 billion, including the assumption of approximately $1.1 billion of net debt. Improved scale is an important value driver over the next several years, which will require unified migration of long haul AND metro network, systems, processes and data, which has eluded LVLT in past transactions...Expensive acquisition if forecast synergies are not realized...Combined company is bigger, but seamless integration is key...Biggest merger benefit is the balance sheet."
For more ratings news on Level 3 Communications click here and for the rating history of Level 3 Communications click here.
Shares of Level 3 Communications closed at $1.44 yesterday.
FBR analyst says, "This morning Level 3 and Global Crossing (Nasdaq: GLBC)(Not Covered) announced a definitive agreement under which Level 3 will acquire Global Crossing in a tax-free, stock-for-stock transaction. The combined network will serve more than 50 countries and connections to more than 70 countries. This transaction will create a company with pro forma combined 2010 revenues of $6.26 billion and pro forma combined 2010 Adjusted EBITDA of $1.27 billion before $300 million in estimated synergies according to LVLT. Global Crossing shareholders will receive 16 shares of Level 3 common stock for each share of Global Crossing common stock or preferred stock that is owned at closing. Based on Level 3's closing stock price on 4/8/11, the transaction is valued at $23.04 per Global Crossing, or approximately $3.0 billion, including the assumption of approximately $1.1 billion of net debt. Improved scale is an important value driver over the next several years, which will require unified migration of long haul AND metro network, systems, processes and data, which has eluded LVLT in past transactions...Expensive acquisition if forecast synergies are not realized...Combined company is bigger, but seamless integration is key...Biggest merger benefit is the balance sheet."
For more ratings news on Level 3 Communications click here and for the rating history of Level 3 Communications click here.
Shares of Level 3 Communications closed at $1.44 yesterday.
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