Acquisition of tw telecom inc. by Level 3 Communications, Inc. May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of tw telecom inc. (NASDAQ: TWTC) by Level 3 Communications, Inc. (NASDAQ: LVLT). On June 16, 2014, the two companies announced the signing of a definitive merger agreement pursuant to which tw telecom shareholders will receive $40.86 in cash for each share of common stock owned. Under the terms of the agreement, tw telecom shareholders will receive $10 cash and 0.7 shares of Level 3 common stock for each share of tw telecom common stock.
Is the Proposed Acquisition Best for tw telecom and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at tw telecom is undertaking a fair process to obtain maximum value and adequately compensate tw telecom shareholders.
As an initial matter, the $40.86 merger consideration represents a premium of just 12.4% based on tw telecom’s closing price on June 13, 2014. This premium is significantly below the average one-day premium of over 20% for comparable transactions in the past three years. Further, tw telecom reported strong results for its first quarter 2014. On May 7, 2014, the company reported revenue of $408.3 million, an increase of more than 7% over the same period 2013. In addition, the company achieved growth in enterprise revenue of 9.2% year over year and an increase in data and internet revenue of 15.1% compared to the same period 2013. Moreover, tw telecom “expect[s] that its 2014 revenue growth rate will be greater than that of 2013.”
In announcing these results, tw telecom’s Chairman and CEO, Larissa Herda, commented, “We delivered strong revenue results for the quarter as we returned value to shareholders and advanced our growth initiatives. We achieved substantial progress on the integration of our strategic market expansion and our ongoing product innovation… Additionally, we recently announced several new alliances with industry leading cloud and data center providers to position ourselves to win greater market share, as we continue to enable enterprises to efficiently access their cloud applications and help their networks run better, faster and easier.”
In light of these facts, Robbins Arroyo LLP is examining tw telecom’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
tw telecom shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
tw telecom shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
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