Is Level 3 Boarding the M&A Train?
Level 3's stock jumped by 3.53% Wednesday following speculation that the company might be looking for a buyer.
The network operator's share price gained $1.92 to close Wednesday at $56.30 following a report by Benzinga that Level 3 Communications Inc. (NYSE: LVLT) is exploring its strategic options, including a sale.
That led to speculation that Comcast Corp. (Nasdaq: CMCSA, CMCSK) (which has been linked to Level 3 before) or even Google (Nasdaq: GOOG) could emerge as potential buyers, or that Level 3 might merge with Zayo Group Inc. (NYSE: ZAYO), another wholesale and enterprise services carrier that could also be an acquisition target for buyers looking for transport network and enterprise customer assets.
Level 3's network includes extensive international assets, particularly in North America and Europe, including 33,000 subsea, 106,000 intercity and 67,000 metro route miles. It also has a presence in 360 data centers and boasts 15,000 CDN (content delivery network) servers worldwide. It has more than 50,000 customers and generated revenues of $8.23 billion and free cash flow of $626 million in 2015.
It is also one of the operators that is leading the way in embracing, and building business, around SDN capabilities and developing new services around its network security capabilities. (See Level 3's Andrew Dugan on the Impact of SDN, Level 3 Makes Security a Network Matter, Level 3: Analytics Unlocks SDN Potential and SDN, NFV Pose Security Risk – Level 3 CMO.)
Level 3, which currently has a market value of about $20 billion, reports its second-quarter financials on July 27.
— Ray Le Maistre, , Editor-in-Chief, Light Reading