RealTime IT News

Global Crossing Acquires Latin American IP

UPDATED: New Jersey-based Global Crossing continues to expand the reach of its IP network -- this time into Latin America.

Details of the $335 million cash-and-stock purchase of Impsat, expected to be final by the first quarter of 2007, includes an offer to pay $9.32 per share of Impsat stock, with a total equity value of $95 million, plus the chance to refinance or repay a $241 million debt.

Despite the cash-strapped state of the South American telecom, Global Crossing described the merger with Impsat as a "perfect example" of its expansion strategy and "the next piece in the puzzle."

The acquisition adds 4,500 customers to Global Crossing's ranks. The purchase also provides the IP network provider access to a significant number of the 1,000 multinational corporations, said John Legere, CEO of Global Crossing. "Enterprise customers are our primary target," he said.

Those new customers will be able to use Global Crossing's network, as well as enable the company to offer its current subscribers greater regional access.

Already in 28 countries, Global Crossing purchased Impsat as part of its focus on multinational corporations requiring global access.

Impsat, already Global Crossing's partner for Latin American data connections, is an example of the leading area of growth in the region, Dave Carey, Global Crossing executive vice president of corporate development, told internetnews.com.

"Latin America is already our fastest-growing region," Legere said during a morning news conference.

As part of the agreement, Global Crossing gains 15 metropolitan networks and advanced hosting centers, plus a regional sales force familiar already familiar with Global Crossing.

For Global Crossing, the pact is expected to result in $270 million added revenue, along with $70 million in annual earnings. Integrating Impsat should save Global Crossing $10 million per year, the companies announced.

Impsat is just the latest acquisition in what Legere said was Global Crossing's "strategic and focused participation in industry consolidation." Already encompassing the U.S., the U.K. and Latin America, more consolidation opportunities exist, according to Global Crossing.

To finance the takeover, Global Crossing said it will use $160 million of existing cash to pay for the Impsat stock buyout plus has received a commitment of up to $200 million from Credit Suisse to refinance the Impsat debt.

To cover its previously announced acquisition of the U.K.'s Fibernet Group, Global Crossing also announced it has received $95 million in financing.

Earlier this month, Global Crossing said it would pay $94.6 million for Fibernet, which included enterprise and carrier customers within the U.K. financial, insurance and retail areas.

Global Crossing already had customers within that country's government and rail sectors.