Level 3 Communications and 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: Level 3 Communications (Nasdaq: LVLT  ) popped 10%, and Global Crossing (Nasdaq: GLBC  ) popped 11%, in intraday trading today, after Level 3 filed an update on the companies' planned merger.

So what: The deal was originally announced on April 11. In an 8-K regulatory filing with the SEC today, Level 3 stated that it expects the deal to close "before the end of 2011, although there can be no assurance as to whether or when the transaction will be completed."

Now what: Investors may be interpreting today's filing as a signal that the deal is more likely to close. The two companies estimate that the merger will generate cost savings of $2.5 billion, transforming two money-losers into a combined company with earnings of about $1.6 billion. Together, the pair might 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 LVLT? Add it to your watchlist.

Interested in more info on GLBC? Add it to your watchlist.

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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  • Report this Comment On May 20, 2011, at 4:56 PM, bottomfisherman wrote:

    Confirms what I know and that MF still does not get it. Anders Article that it was a wrong move for them to merge with global crossing was completely off the mark. With completion of merger company will be very large world wide communication company and will continue to take market share from that MF favorite Akamai that by the way has lost 30 percent of its share value since the beginning of the year.

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