US West, Global Crossing to merge

By Jana Sanchez
IDG News Service, 05/17/99

Global Crossing and US WEST have agreed to merge and create a new telecommunications carrier with a market capitalization of more than $75 billion.

The two companies will join to form Global Crossing Corp., owned 50% by US WEST shareholders and the other half by Global Crossing and Frontier shareholders, the companies said.

Frontier is a long-distance company from Rochester, N.Y., that Global Crossing is already in the process of acquiring.

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The three companies separately had revenue of $15 billion in 1998. Their combined networks will cover 115,000 route miles and 2.8 million fiber miles in 19 countries and 185 cities, the companies said.

Solomon Trujillo, chairman, president and CEO of US WEST, and Robert Annunziata, CEO of Global crossing, will share the role of chairman and CEO of the new company. The 22-member board will be comprised of 10 members each from Global Crossing and US WEST, with two additional members selected by mutual agreement, the companies said.

The deal will involve US WEST purchasing about 9.5% of Global Crossing's outstanding shares. The two companies' shareholders will then exchange their shares for those in the newly created entity.

US WEST will make a cash offer for 39 million of Global Crossing shares at $62.75 per share. This offer will begin within five days and will be completed next month, the companies said. To complete the deal, two types of stocks in the new company will be created, one a high-growth type or Class G share, and the other an income-oriented investment stock called a Class L share. Each US WEST share will be exchanged for about 1.2 Class G or Class L shares, and each Global Crossing share will be exchanged for one of either type of share.

The merger must be approved by shareholders of both companies and by the Federal Communications Commission and other government regulators. If approved, the merger is expected to close in mid-2000, the companies said.