Level 3 is set to acquire tw telecom in a deal valued at around $7.3 billion.
The value of the transaction will be $40.86 per share based on market close as of June 13, 2014.
Jeff Storey, president and CEO of Level 3, said: “The transaction further solidifies Level 3’s position as a global communications provider to the enterprise, government and carrier market, combining tw telecom’s local operations and assets in North America with Level 3’s global assets and capabilities.”
The combination is expected to provide $240 million of annualized synergies, with $200 million from Adjusted EBITDA savings and $40 million from capital expense savings.
Level 3’s customers will benefit from tw telecom’s metropolitan footprint and buildings connected to the network, enabling a better quality and reliable on-net experience for customers doing business in North America.
tw telecom’s customers will benefit from Level 3’s local-to-global footprint, with owned network and data centers in more than 60 countries and significant global subsea networks.
For the twelve months ending March 31, 2014, the combined company had pro forma revenue of $7.9 billion and Adjusted EBITDA of $2.2 billion before synergies and $2.4 billion including expected run-rate expense synergies.
The company estimates that the net present value of the potential synergies will be approximately $2 billion. The company expects to realize approximately 70 percent of expected Adjusted EBITDA savings within 18 months after closing the transaction.
The company expects to incur approximately $170 million of integration costs associated with this transaction, with approximately 60 percent of those costs from operating expenses, and 40 percent from capital expenditures to support integration activities.