Level 3 snags Broadwing for $1.4 billion

Level 3 Communications is snatching up rival Broadwing Corp. for $1.4 billion, paying approximately $744 million in cash while issuing approximately 122 million shares.

Broadwing, based in Austin, Texas, delivers data, voice and media solutions to enterprises and service providers over its 19,000 mile intercity fiber network. Approximately half of Broadwing s revenue comes from the wholesale market, with business customers comprising the remaining revenue.

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, said James Q. Crowe, chief executive officer of Level 3. We believe the combination of Level 3 and Broadwing will create value for our investors through the elimination of duplicative network and operating costs, the addition of a solid revenue base, and a further strengthening of our financial position.

Under the terms of the agreement, Level 3 will pay $8.18 in cash plus 1.3411 shares of Level 3 common stock for each share of Broadwing common stock outstanding at closing. Based on yesterday’s $5.32 closing price of Level 3’s common stock, each share of Broadwing stock would receive consideration equivalent to $15.31 per share. The actual value of the consideration received by Broadwing stockholders at closing will depend on Level 3’s share price at such time.

“Bringing together the resources and talents of Broadwing and Level 3 is an exciting opportunity for our company, allowing us to capitalize on the strengths of both companies and on advances in technology,” said Steve Courter, CEO of Broadwing Corporation. “The combination of our two operations will create a powerful company in the global telecommunications industry with strong growth potential.”

Closing is subject to customary conditions, including receipt of applicable state and federal regulatory approvals, and is also subject to the approval of the stockholders of Broadwing. Closing is expected to occur in the first quarter of 2007.