Mark, looks like we just talked them down $150 million. From tomorrow's The Wall Street Urinal:
Dow Jones Newswires -- April 25, 1999
WSJ: Global Crossing To Buy Cable & Wireless Undersea Unit
From Monday's Wall Street Journal By Steven Lipin and Stephanie N. Mehta
NEW YORK (Dow Jones)--A start-up in the telecommunications business is buying one of the
industry's pioneers.
Global Crossing Ltd., which is building fiber-optic networks around the world, plans to acquire the
undersea-cable operations of Cable & Wireless PLC for about $725 million, according to people
familiar with the situation.
The move gives Global Crossing, of Hamilton, Bermuda, the ability to lay and maintain its own fiber
cables. So far, Global Crossing has contracted outsiders to build and maintain its networks. It
currently boasts one operational cable linking the U.S., the United Kingdom, the Netherlands, and
Germany. Global Crossing is building several others.
The global-marine unit of Britain's Cable & Wireless traces its roots to the founding of the company,
which in 1850 laid the first telegraph cable between England and France. The unit now is one of two
leaders in the fast-growing business of undersea-cable installation and maintenance. Clients include
AT&T Corp., MCI WorldCom Inc., Deutsche Telekom AG and British Telecommunications PLC.
Its major competitor is Tyco Submarine Systems Ltd., a unit of Tyco International Ltd. Tyco
acquired the business from AT&T in 1997 for about $850 million.
By owning a cable-installation operation, Global Crossing could save as much as $100 million
annually in construction and maintenance expenditures. The planned acquisition also allows Global
Crossing to take advantage of the boom in undersea-cable projects.
Level 3 Communications Inc., for example, recently announced plans to build an undersea-cable
system connecting New York to Britain. Another start-up, CTR Group Ltd., plans to build an
international fiber-optic network with undersea cables connecting the continents.
Telephone companies believe the explosion in Internet-related traffic will create demand for additional
pipes to carry data around the world. All told, telephone companies are expected to spend $31
billion on undersea-cable projects during the next three years, according to research by Goldman
Sachs & Co.
Global Crossing itself aims to construct undersea networks connecting four continents and land-based
networks in Europe, South America and Japan. Last month, the company announced plans to acquire
Frontier Corp., a Rochester, N.Y., telephone company, for $11.2 billion, giving the company a
foothold in the U.S. market. That deal is on track to close in the third quarter, according to people
familiar with the matter.
Global Crossing is expected to name William B. Carter Jr. to head the global-marine unit. He served
as president and chief executive of AT&T's submarine-systems business before its sale to Tyco.
The proposed acquisition of the business also calls for Global Crossing to assume about $160 million
in debt.
For Cable & Wireless, the sale of its global-marine unit is yet another piece in a restructuring. Among
other measures, the company is considering a proposal to merge its British cable-television assets
with rival operator Telewest PLC. |
