Cincinnati Bell To Acquire IXC
Jul. 22, 1999
CINCINNATI (AP) _ Cincinnati Bell agreed to pay $2.2 billion in stock to acquire IXC Communications, a long-distance phone company that's been building a fiber-optic network.
The deal would help Cincinnati Bell, a local telephone company, transform itself into a national player carrying voice and Internet traffic across a network of about 13,000 miles.
``With this move, we are now positioned to offer a bundle of local, long distance ... and other advanced (data) services to businesses nationwide,'' said Richard Ellenberger, president and chief executive officer of Cincinnati Bell.
The merger with IXC, based in Austin, Texas, would create a company with more than 1 million customers, 5,000 employees and a market value of more than $7.2 billion.
Under the agreement announced Wednesday, each share of IXC would be converted to 2.0976 shares of Cincinnati Bell common stock.
The deal, which also calls for Cincinnati Bell to assume about $1 billion of debt, initially valued IXC at slightly less than $50 a share. However, a 16 percent plunge by Cincinnati Bell's stock on Wednesday shrank the value of the shares that IXC investors would get to just $40 a share.
In Wednesday's Nasdaq trading IXC stock rose 10 percent, closing $3.50 higher at $39.75. On the New York Stock Exchange, Cincinnati Bell fell $3.75 a share to $19.12 1/2.
Investors holding about 40 percent of IXC's stock have agreed to vote in favor of the deal. Cincinnati Bell has agreed to buy 5 million IXC shares from the General Electric Pension Trust for a cash price of $50 per share.
Ellenberger will be president and CEO of the merged company, which would be based in Cincinnati. John Zrno, chief executive of IXC, will join Cincinnati Bell's board of directors.
The merger is expected to be completed late in the fourth quarter or early next year, pending regulatory.