Level 3 acquires Global Crossing

Top M&A 2011Deal size: $3 billion

Why it's relevant? As Level 3 (NYSE: LVLT) continued to look for ways to diversify its wholesale, and perhaps, more importantly its enterprise service capabilities, the service provider decided to break its long-standing M&A hibernation and purchase Global Crossing for $3 billion.

By acquiring Global Crossing, Level 3 creates a company that will serve customers in 50 countries and providing connections to over 70 countries.

From a geographic and revenue perspective, the new company's revenue will be dominant in three regions: North America will make up 70 percent ($3.57 billion) of revenue; Europe will make up 18 percent ($939 million); and Latin America will make up 12 percent ($597 million). On a pro forma basis, total revenues will be $6.2 billion.

Level 3 also gained a complementary set of collaboration services, VPN, cloud offerings and managed services it can now extend to its customer base. Likewise, Global Crossing's customers will have more control over their experience as it will be able to carry more of its enterprise services over Level 3's own metro fiber networks.

Outside of the enterprise service domain, another key service element of the acquisition centers around Content Delivery Network (CDN).

One of the major growth drivers Level 3 will be around CDN services. While it has extensive CDN presence in the U.S., the Global Crossing acquisition will give it instant CDN access in Latin America, one that Global Crossing recently bolstered with its acquisition of Genesis Networks, in addition to mid-market and large enterprise services.

Coinciding with CDN is greater presence in the Latin America market, one that's poised for greater growth for Content Delivery Network (CDN) and enterprise services with the upcoming World Cup event.

Of course, the challenge for the company is to ensure that it can apply any lessons learned from the other acquisitions that posed various integration challenges for the company in 2007.

However, by coming out of the gate and addressing the issue dead on saying that it does not want to fall victim to the issues it saw during its acquisition spree throughout the 2000s, Level 3 sent a clear message that it can avoid potential problems.

Level 3 acquires Global Crossing