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April 12, 2011

Level 3 Communications to buy Global Crossing

Combined network will serve customers in over 70 countries

By CBR Staff Writer

Level 3 Communications and Global Crossing have entered into a definitive agreement under which Level 3 will acquire Global Crossing in a tax-free, stock-for-stock transaction.

The combined company will operate a unique global services platform anchored by fiber optic networks on three continents, connected by extensive undersea facilities, said the company.

The combined network will serve a worldwide customer set with owned network in more than 50 countries and connections to more than 70 countries.

The transaction will create a company with pro forma combined 2010 revenues of $6.26bn and pro forma combined 2010 Adjusted EBITDA of $1.27bn before synergies and $1.57bn after expected synergies, the company said.

Under the terms and subject to the conditions of the agreement, 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 8 April 2011, the transaction is valued at $23.04 per Global Crossing common or preferred share, or approximately $3.0bn, including the assumption of approximately $1.1bn of net debt as of 31 December 2010.

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Level 3 chief executive officer Jim Crowe said, "This is a transformational combination that we believe will deliver significant value to the investors, customers and employees of both Level 3 and Global Crossing."

"The complementary fit between the two companies’ networks, service portfolios and customers is compelling."

Global Crossing chief executive officer John Legere said, "Each of our companies has a reputation for being nimble and flexible in meeting customers’ communications needs, and we expect that to continue – with the added benefit of offering customers significantly greater reach, products and services."

The transaction is expected to close before the end of the year, pending regulatory and shareholder approval.

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