In a nod to the future of cross border trading, Global Crossing Ltd. Tuesday bought
IP network services firm IXnet and its
parent company IPC Communications for $3.8
billion in stock.
Under the terms of the deal, Global Crossing (GBLX)
will release 1.18 million shares for each IXnet (EXNT)
share not owned by IPC, which owns 73 percent of IXnet’s fully diluted
shares. IPC (IPI)
shareholders will get 5.4 Global Crossing shares for each in a separate
exchange. The agreement values IXnet at $3.65 billion.
IXnet provides IP connectivity to a network of 600 financial clients, with
points of presence (POPs) in 37 countries. The vast majority of its
customers are in the global trading and global financial communications
sector, and include heavyweights such as Citigroup, Chase, Goldman Sachs,
Deutsche Bank, HSBC, and Nomura. IXnet also distributes finance-related
content from more than 30 sources, and IPC has a 60 percent global-level
hold on the desktop trading systems market.
IXnet will now send its data over Global Crossing’s soon-to-be-completed
network, reducing its operating costs.
Bob Annunziata, chief executive officer of Global Crossing, called the deal a “great strategic
fit” and said that Global Crossing will use the purchase to move into the
desktop-to-desktop multinational corporation market.
“IXnet will give us new capabilities and increased presence in Asia where we
are currently partnering with Microsoft, Softbank and Hutchison Whampoa, as
well as in the financial markets of Europe and the Americas where it is
already
the market leader,” added Annunziata.
The purchase is expected to be finalized in the second quarter. Shareholder
approval is not required, because 60 percent of IPC is held by Citicorp
Venture Capital, which has already set its stamp of agreement on the deal.
