Level 3 Communications To Acquire Broadwing Corp.

[update: 2007.01.04] This "merger" has been completed and there is no more trading in BWNG shares. BWNG's final closing price was $15.73, while on the same day, 3 January 2007, LVLT closed at $5.65.

Broomfield, CO-based Level 3 Communications is buying Austin, TX-based Broadwing Corp. for about $1.4 billion in cash and stock. Level 3 is paying $8.18 in cash, plus 1.3411 shares of its common stock for each share of Broadwing.

On 16 October 2006, Level 3 ( LVLT) stock closed at $5.32 and Broadwing ( BWNG) stock closed at $13.28.

Zelmo Zeroman owns 255 shares of BWNG and he needs help figuring out the state of his investment.

Exercises
  1. Using the data given in this BAB, after the transaction is executed, Zelmo will receive $___________ in cash and ___________ LVLT shares.

  2. Zelmo's paid $10.21 for each of his BWNG shares. therefore, he has $____________ invested in Broadwing.

  3. After the transaction is executing, excluding the value of of his LVLT shares, Zelmo will have $_________ invested in Level 3 Communications.

Note: Broadwing is in the MUSE Portfolio, which was established during late-December of 2005.


Creator: Gerald D. Thurman [gthurman@gmail.com]
Created: 17 October 2006

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