Global Crossing Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Global Crossing Limited (Nasdaq: GLBC  ) popped 79% in intraday trading today after agreeing to be acquired.

So what: Global Crossing agreed to be acquired by Level 3 Communications (Nasdaq: LVLT  ) for $1.9 billion, which values Global Crossing at $23.04 a share. Level 3 will assume about $1.1 billion of Global Crossing's debt.

Now what: Both companies have posted annual losses for at least five years. The companies estimate the merger will generate cost savings of $2.5 billion, resulting in earnings of about $1.6 billion for the combined companies.  The combined companies may also benefit from more rational pricing in the industry, which could boost revenue and be an additional positive for earnings.  

Interested in more info on Global Crossing? Add it to your watchlist by clicking here.

Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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