Global Crossing in big buy
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February 22, 2000: 12:53 p.m. ET
Fiber optics company plans to acquire Ixnet and parent IPC Communications
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NEW YORK (CNNfn) - Fast-growing long-distance carrier Global Crossing Ltd. announced plans Tuesday to buy IXnet Inc., a broadband communications provider targeting financial institutions, and its parent IPC Communications Inc. in an all-stock deal worth about $3.8 billion.
Shares of both IPC (IPI: Research, Estimates) and IXnet (EXNT: Research, Estimates) - whose blue-chip clients include Goldman Sachs Group Inc. (GS: Research, Estimates), Merrill Lynch (MER: Research, Estimates) and Citigroup (C: Research, Estimates) -- soared on the news.
Global Crossing (GBLX: Research, Estimates), a Bermuda-based start-up that is laying an undersea cable network, will offer 1.184 of its shares for each share of IXnet not owned by IPC. IPC owns about 73 percent of IXnet.
Based on Friday's closing stock prices, the deal values IXnet shares at about $62.03 apiece, an 18 percent premium, for a total value of about $3.65 billion, based on IXnet's 59.2 million fully diluted shares outstanding.
IXnet stock surged 13-1/8 to 65-5/8, a record high, after the deal was announced. The previous high was 54-3/8.
Global Crossing will exchange 5.417 of its shares for each IPC share, valuing the company's stock at $283.71 apiece, a 100 percent premium, for a total value of about $150 million excluding the value of the company's stake in IXnet.
IPC shares rocketed 109-15/16 to 249-15/16 at midday.
Global Crossing stock dropped 3-3/4 to 48-5/8.
"IXnet is a great strategic fit for us," Global Crossing CEO Bob Annunziata said. The company "will leverage our seamless global network through the provision of sophisticated IP and data services to financial institutions, one of the largest and fastest growing customer segments."
The deal is expected to close in the second quarter, pending regulatory approvals.
Global Crossing has been on an acquisition spree in an effort to build a global fiber-optic network.
Last year, the company was forced to back off from a deal to a $37 billion buyout of Denver-based Baby Bell U S West (USW: Research, Estimates) after No. 4 U.S. long-distance carrier Qwest Communications Inc. (QWST: Research, Estimates) trumped its bid with a $55 billion rival offer. Global Crossing ultimately walked away with a smaller acquisition, local and long-distance provider Frontier Corp., (FRO: Research, Estimates) for about $11 billion.
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