Global Crossing Agrees to Buy IPC, Subsidiary IXnet
Fast-growing communications firm Global Crossing Ltd. said Tuesday that it agreed to buy two New York-based communications companies for $3.8 billion in stock in a deal that gives Global Crossing’s burgeoning fiber-optic network a solid base of blue-chip customers in the financial services industry.
The purchase of IPC Communications and subsidiary IXnet is part of Global Crossing’s push to flood its newly constructed network with customer traffic. IXnet dominates the market for providing investment and commercial banks, traders and other financial services firms with communications technology for video, market data and news.
Global Crossing Vice Chairman Thomas Casey said that in addition to bringing substantial new data traffic to its network, IXnet will give the company entry into the financial services industry, which spends about $30 billion a year on specialty communications services.
Bermuda-based Global Crossing, which has executive offices in Beverly Hills, reported last week that its heavy network investments led to losses of $184 million, or 24 cents per share, for the fourth quarter of 1999, while sales grew 6% to $1.1 billion.
Investor reaction was mixed in the wake of the deal’s announcement, with Global Crossing’s stock dropping more than 7%, to $48.63, while shares of IXnet rose $2.50 to $55 on the Nasdaq. The stock of thinly traded IPC Communications soared 74% to $244.25, up $104.25 per share in American Stock Exchange trading.
IPC Communications and its publicly traded subsidiary IXnet are both based in New York.
Under terms of the deal, Global Crossing will exchange 1.184 shares of Global Crossing stock for each IXnet share not owned by IPC. Based on Friday’s close for Global Crossing’s stock, the price amounts to about $62.03 per share of IXnet--or nearly a 10% premium over IXnet’s closing price before the deal was announced.
IPC shareholders will receive 5.417 shares in Global Crossing for each IPC share owned--or about $283.71 per IPC share.
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