When Level 3 completes its $5.7 billion acquisition of tw telecom later this year, five members of its top management team could get cash-and-stock payouts valued at $88 million, reports The Denver Post.
tw telecom's CEO Larissa Herda is set to receive nearly $42 million in cash, stock awards and other benefits, which stem from the change-of-control terms in her employment contract and based on Level's 3 purchase price of $40.86 per share.
The two companies revealed on Monday that Herda will leave the company after the deal closes. After clearing necessary state and federal regulatory reviews, Level 3 expects the acquisition to close in the fourth quarter.
Although tw telecom would not say which executives are planning to join Level 3, The Denver Post estimates that the service provider's top four executives could receive the following packages: John Blount, president and COO, $21.2 million; Mark Peters, CFO, $16.2 million; Jill Stuart, chief accounting officer, $5.7 million; and Tina Davis, general counsel, $3.5 million. The Post said that these estimates are based on the $40.86 per share purchase price.
Both companies revealed in a regulatory filing that if either company decided to back out of the deal, they would have to pony up break-up fees ranging from $200 million to $450 million. Level 3 would be required to pay tw telecom $450 million if it walked away, while tw telecom would have to pay Level 3 $200 million if it accepted a higher offer from another service provider.
While there had been rumors that CenturyLink (NYSE: CTL) was also interested in buying tw telecom, the telco has yet to announce its own bid for the company.
Service providers competing to purchase assets have been a common trend as the service provdier industry has continued to consolidate. Qwest, now CenturyLink, lost out to Verizon (NYSE: VZ) to purchase MCI in 2005, for example.
Besides the breakup fees, the proposed merger is now facing scrutiny from Andrews & Springer LLC, which said it "is investigating whether tw directors are breaching their fiduciary duties by failing to adequately shop the company and maximize shareholder value."
For more:
- The Denver Post has this article
Editor's Corner: Level 3's tw telecom deal is all about scaling its local-to-global service presence
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