Level 3 Communications to buy TW Telecom

Telecommunications services company Level 3 Communications said it would buy internet services provider TW Telecom for $40.86 per share in a cash and stock deal to expand its commercial fiber network in the United States.

The deal, valued at about $5.64 billion based on outstanding shares as of April 30, represents a premium of 12 percent to TW Telecom's Friday closing price of $36.34 on the Nasdaq.

Under the terms of the deal, tw telecom stockholders will get $10 cash and 0.7 shares of Level 3. 

Level 3 said it expects integration costs of about $170 million and potential savings of about $2 billion. 

U.S.-based TW Telecom, which was founded in 1993 as a joint venture between US West and Time Warner, is one of the largest business ethernet providers in the United States, connecting more than 20,000 commercial buildings to its fiber network. 

Level 3 operates and leases out fiber-optic communications networks to telecom carriers for voice and data communication.