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Level 3 to acquire unit of Savvis

December 27, 2006|From Bloomberg News

Level 3 Communications Inc., an unprofitable phone and data-network operator, agreed Tuesday to buy an Internet services business of Savvis Inc. for $135 million.

The Savvis unit, which is based in Thousand Oaks, brought in sales of about $15 million in the nine months ended Sept. 30, Broomfield, Colo.-based Level 3 said.

The purchase is Level 3's seventh in the last year. The company is increasing the services offered over its fiber optic network.

Tuesday's deal includes networking equipment, customer contracts and intellectual property. The Savvis unit manages Internet services, distributing print, music, film, videos and games for customers. Clients include Microsoft Corp.

Level 3 shares, which have almost doubled this year, fell 7 cents to $5.59. Shares of Town & Country, Mo.-based Savvis, a supplier of Internet-based computing services, rose $1.10 to $37.02.

The all-cash acquisition should be completed during the first quarter of 2007, Level 3 said.

The Savvis unit employs about 50 workers. It has more than 100 customers and operates in more than 20 countries, Level 3 said.

Level 3 on Oct. 17 agreed to buy Broadwing Corp. for $1.4 billion to add larger corporate clients and a 19,000-mile fiber optic network.

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