BOSTON (02/22/2000) - In a move that would allow it to penetrate the financial market sector, Global Crossing Ltd. announced today its intention to acquire IXnet Inc., a provider of IP-based network services to the financial community, and its parent company IPC Communications Inc. for US$3.8 billion.
Global Crossing, a company that builds and operates a global IP-based fiber-optic network, expects the acquisition to be completed in the second quarter of this year. Under the definitive merger agreement, 1.184 of Global Crossing's shares will be exchanged for each IXnet share not owned by IPC, and 5.417 Global Crossing shares will be exchanged for each of IPC's.
Buying IXnet is seen as the next evolutionary step for Global Crossing, as it plans to move beyond just providing connectivity from shore-to-shore, city-to-city, building-to-building and desktop-to-desktop, according to Bob Annunziata, chief executive officer of Global Crossing. The company needs to start delivering services and getting more end-users on the network, a task which IXnet is capable of, he added. Annunziata, along with other Global Crossing and IXnet executives, was speaking on a teleconference held today.
The strategic rationale that drove Global Crossing to this transaction relates to the leverage that the company can gain by increasing its penetration into the larger corporation market and advancing its service rollout in North America, Europe, and Asia, said Tom Casey, vice chairman of Global Crossing.
The company believes that this transaction is key in advancing its product and services portfolio, as well as its customer penetration in all of these regions, he added.
Through the acquisition, IXnet will benefit from cost reduction when it switches over from its leased lines to provide global bandwidth to Global Crossing Networks, which is a global fiber optic network with 97,200 announced route miles, spanning 24 countries and 200 cities.
It is an exciting time for IXnet as it plans to attach itself to a company that has the best network assets in the world, said David Walsh, CEO of IXnet. With an estimated 200 to 300 percent future increase in network traffic which the current legacy infrastructure will unable to accommodate, IXnet will be in a position to take on that challenge with the new synergy between Global Crossing's infrastructure and its own network intelligence, Walsh added.
The acquisition, which is subject to regulatory approval and customary closing conditions, is not subject to shareholder approval, and will be accounted for as a purchase. The acquisition is expected to be tax-free to IPC and IXnet's shareholders.
IXnet provides IP connectivity to more than 600 financial institutions for global trading and communications, and also hosts and distributes market data, news, streaming video, research and analytics for more than 30 content providers. IXnet's clients include Morgan Stanley Dean Witter & Co., Goldman, Sachs & Co., Merrill Lynch & Co. Inc., Citigroup Inc., Chase Manhattan Bank Corp., Deutsche Bank AG, Barclays Bank PLC, Hong Kong and Shanghai Banking Corp. (HSBC), and Fidelity Investments.
Global Crossing Ltd. in Hamilton, Bermuda, is online at http://www.globalcrossing.com/. IXnet Inc. and IPC Communications Inc., in New York City, can be reached at +1-212-825-9060 or at http://www.ixnet.com or http://www.ipc.com/.