BREAKFAST WITH THE FOOL
Monday, October 11, 1999
"Nothing so needs reforming as other people's habits."
-- Mark Twain
Global Crossing Wraps Up Racal Telecom Buy
Richard McCaffery (TMF Gibson)
Internet and telecommunications provider Global Crossing (Nasdaq: GBLX) has reached an agreement to acquire the telecommunications business of Racal Electronics for $1.65 billion in cash and debt.
Global Crossing, which completed its multibillion dollar acquisition of Frontier Corp. in late September, outbid telephone and data services company Energis Plc. to claim a valuable portion of Racal, the London-based defense electronics company, according to news reports.
Racal operates a 7,300 kilometer fiber optic network in the United Kingdom that will expand Global Crossing's network solidly into Europe. It gives Global strategically located fiber connections to every major city in the U.K., which is the fourth largest and fastest growing international telecommunications market.
Global Crossing is building a worldwide undersea and land-based fiber optic network to compete against global telecommunications companies such as MCI WorldCom (Nasdaq: WCOM), AT&T (NYSE: T), and British Telecommunications (NYSE: BTY). Once complete, the network will connect 170 cities worldwide.
Global is a telecommunications wholesale company, meaning it doesn't offer retail services like AT&T does. Instead it leases capacity on its network to retail carriers.
The company has built or is building a fiber optics network linking the U.S. with Europe, Asia, the Caribbean, and Latin America. Global Crossing has raised more than $4 billion in equity and bond financing to build its information highway, and estimates the total cost of developing and deploying the network will be about $4.9 billion.
In addition to building its own network, the company's strategy has included purchasing available networks to expand the number of cities it can reach.
The deal is expected to add slightly to earnings this year, and double digits next year, Bloomberg reported.
News to Go
Intimate apparel and clothing maker Warnaco Group (NYSE: WAC) has moved to buy Authentic Fitness (NYSE: ASM) for $525 million in cash and assumed debt. The deal, which would add to Warnaco's earnings this year, is a 16.7% premium to Authentic's closing price of $17 9/16 on Friday.
Dietary supplement maker Natrol (Nasdaq: NTOL) acquired privately held Prolab Nutrition for $29 million in cash and 124,270 shares of common stock. Prolab makes sports nutrition products and expects sales of more than $30 million this year.
Retail food and drugstore chain Kroger (NYSE: KR) reached a tentative agreement with representatives from the United Food and Commercial Workers Union to avoid strikes by two local organizations, Reuters reported. Agreements have been reached with locals representing 8,500 workers in Ohio, West Virginia, Kentucky, and Indiana.
Newspaper, television, and cable system operator E.W. Scripps (NYSE: SSP) reported third quarter earnings per share (excluding unusual items) of $0.36, up from $0.32 a year ago, but short of the First Call/Thomson mean estimate of $0.40.
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