XO to Acquire Allegiance for $311 Million
February 13, 2004 -- (WEB HOST INDUSTRY
REVIEW) -- Telecommunications carrier XO Communications
(xo.com) has been
selected as the winning bidder for substantially all of
the assets of Texas-based carrier Allegiance Telecom (algx.com) and its
subsidiaries, the company announced on Friday. The
acquisition does not include Allegiance's equipment and
maintenance business, managed modem business and other
unspecified assets and operations.
Under the terms of the transaction, XO
will acquire all the Allegiance assets covered by the
agreement for $311 million in cash and 45.38 million
shares in XO common stock.
The companies said the transaction,
subject to regulatory approval and termination of
applicable waiting periods, should be completed within
the next few days and will be submitted to US bankruptcy
court for the southern district of New York for approval
on February 19. Allegiance Telecom filed
for chapter 11 bankruptcy last May.
XO said the acquisition of Allegiance will
make it the largest independent provider of national
local telecommunications and broadband services in the
United States, with 330,000 customers and $1.6 billion
in revenue.
"The acquisition of Allegiance Telecom's
network assets will make XO the nation's largest
national local telecommunications services provider,"
says Carl Grivner, chief executive officer of XO
Communications. "The combination of XO and Allegiance is
good for both the industry and businesses. It will
contribute to increased competition for regional Bell
operating companies and give businesses more choices for
their end-to-end telecommunications needs. In addition,
the acquisition increases the density of our PoPs
(Points of Presence) in local markets, which uniquely
positions XO to sell last mile and metro services to all
the large long distance companies."
Griver also said that he expects the
acquisition, over time, to help XO reduce network costs
by $60 million and general and administrative costs by
$100 million.
"The telecommunications industry is ripe
for consolidation, and this acquisition strengthens XO's
platform for the future acquisition of undervalued
assets in the industry," says Carl Icahn, chairman of XO
Communications.
