Transaction Combines Industry Leading Network Scale and Video Capabilities with Pioneering Content Distribution Capabilities
Company Will Be Well Positioned to Target Growth of Rich Media Services over the Internet
BROOMFIELD, Colo., December 26, 2006 - Level 3 Communications, Inc. (Nasdaq: LVLT) today announced that it has signed a definitive agreement to acquire the Content Delivery Network (CDN) services business of SAVVIS, Inc. (Nasdaq: SVVS). Under the terms of the agreement, Level 3 will pay $135 million in cash consideration to acquire certain assets, including network elements, customer contracts, and intellectual property used in SAVVIS’s CDN business. The purchase price is subject to certain customary post closing working capital adjustments.
SAVVIS’s CDN services business, based in Thousand Oaks, Calif., with approximately 50 employees and over 100 customers, provides solutions that improve performance, reliability, scalability and reach of customers’ online content. Initially developed in 1996 as Sandpiper Networks, the division developed, deployed and operated the world’s first content delivery network. It has a globally distributed infrastructure in more than 20 countries.
“The acquisition of SAVVIS’s CDN services business will enable Level 3 to better address the increasing opportunity presented by rich media applications such as video, Web 2.0 applications, multiplayer online gaming and software as a service over the Internet,” said Kevin O’Hara, president and chief operating officer of Level 3. “We are looking forward to welcoming the pioneers of CDN to our team.
“The largest customers of CDN services rely on a combination of capabilities to support their businesses. These include services like CDN, IP transit, wavelengths, metro transport, and colocation. Upon completion of this transaction, Level 3 believes that it will be the only CDN services provider with a single source, full portfolio of end-to-end content distribution solutions, and will be in a unique position to offer a range of building blocks to meet these customers’ needs.
“Level 3 already has a strong brand and capabilities in video distribution through its Vyvx business. With native CDN capabilities and with Level 3’s highly scalable, industry-leading IP backbone, we believe that Level 3 will be able to bring additional value to all video-centric companies by delivering video in a more intelligent and comprehensive way to a broader range of destinations.
“This acquisition does not require the type of physical integration associated with the metro and backbone transactions we announced earlier this year. We are confident in our ability to incorporate this key capability into our portfolio.”
SAVVIS’s content delivery customers include some of the largest enterprises in the world, including Microsoft.
“As we grow our online services business, stability and control over our network infrastructure becomes increasingly important to deliver great experiences for our customers, partners and advertisers,” said Arne Josefsberg, general manager of Global Foundation Services at Microsoft. “We look forward to a continued relationship with Level 3 as they embark upon this next phase of their network evolution.”
SAVVIS’s CDN business had approximately $15 million in revenue for the nine months ending September 30, 2006.
Closing is subject to customary conditions, including receipt of Hart-Scott-Rodino approval. Closing is expected to occur in the first quarter of 2007.
About Level 3 Communications
Level 3 Communications, Inc. (NASDAQ: LVLT), an international communications company, operates one of the largest Internet backbones in the world, connecting 180 markets in 18 countries. The company serves a broad range of wholesale, enterprise and content customers with a comprehensive suite of services including: Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, voice and voice over IP services, content delivery and media distribution services. These services provide the building blocks to enable Level 3’s customers to meet their growing demands for advanced communications solutions. The company’s Web address is www.Level3.com.
"Level 3 Communications,” "Level 3," the red 3D brackets and the Level 3 Communications logo are registered service marks of Level 3 Communications, LLC in the United States and/or other countries. Level 3 services are provided by wholly owned subsidiaries of Level 3 Communications, Inc. Any other service, product or company names recited herein may be trademarks or service marks of their respective owners.
Forward-Looking Statement
Some of the statements that we make in this press release are forward looking in nature. These statements are based on management’s current expectations or beliefs. These forward looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside our control, which could cause actual events to differ materially from those expressed or implied by the statements. The most important factors that could prevent us from achieving our stated goals include, but are not limited to our ability to: successfully integrate acquisitions; increase the volume of traffic on our network; defend our intellectual property and proprietary rights; develop new products and services that meet customer demands and generate acceptable margins; successfully complete commercial testing of new technology and information systems to support new products and services; attract and retain qualified management and other personnel; and meet all of the terms and conditions of our debt obligations. Additional information concerning these and other important factors can be found within Level 3’s filings with the Securities and Exchange Commission. Statements in this press release should be evaluated in light of these important factors. Level 3 is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
