EXHIBIT 99.1
GLOBAL CROSSING AND U S WEST TO MERGE
Leaders In DSL, Next-Generation Network Create First Global & Local Service
Provider
- - Will deliver seamless end-to-end connectivity for local, national and
international customers - Two separate tracking stocks will provide choice for
income and growth investors - $75 billion company with 115,000 route miles will
connect 185 cities worldwide
HAMILTON, BERMUDA and DENVER, CO, May 17, 1999 - Global Crossing Ltd. (NASDAQ:
GBLX) and U S WEST, Inc. (NYSE: USW) today announced a definitive agreement for
an industry-transforming merger that will create a seamless end-to-end local-to-
global broadband network, provide integrated telecommunications and data
services, and accelerate the deployment of high speed Internet services to
local, national and global markets.
The new company, which will be called Global Crossing Corporation, will be the
first Global and Local Service Provider in an era when traditional RBOCs and
long distance carriers are becoming obsolete. Including Frontier Corporation
(NYSE: FRO), a leading provider of integrated telecommunications and Internet
services which is being acquired by Global Crossing, the combination has a
current pro forma market capitalization of more than $75 billion. The new
company will be 50% owned by Global Crossing/Frontier shareholders and 50% owned
by U S WEST shareholders.
The three companies had combined 1998 sales in excess of $15 billion; earnings
before interest, taxes, depreciation and amortization (EBITDA) of over $6.2
billion, and over 63,000 employees. They will have over 115,000 combined route
miles, more than 2.8 million fiber miles and a network linking 19 countries and
185 cities.
Solomon D. Trujillo, Chairman, President and CEO of U S WEST, said, "This merger
brings together the first mile, the last mile and everything in between. It
opens up a new world of advanced communications services to local customers
across the globe. It combines all the elements necessary for building the data-
centric telecommunications network of the future for both residential and
commercial customers."
Robert Annunziata, Chief Executive Officer of Global Crossing, said, "This
transaction will give local users in the U.S. and around the world seamless
access to a full array of advanced data, voice and Internet capabilities and
services across a cutting-edge global network. The combination will create an
aggressive, high-bandwidth communications carrier which will target telecom
markets worldwide. U S WEST's advanced technology and more than 25 million
customers in the fastest growing region of the U.S. make it an ideal partner as
we continue to expand our global infrastructure."
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The new company will establish two separate tracking stocks to give investors a
choice of high-growth and income-oriented investment options. Global Crossing
"Class G" (Global Service Provider) shares will track the high-growth global
data and voice network and Internet assets and are not expected to pay a cash
dividend. Global Crossing "Class L" (Local Service Provider) shares will track
the performance of the combined companies' existing local telecommunications
assets and are expected to pay an attractive cash dividend.
In the transaction, each U S WEST share will be exchanged for approximately 1.2
shares of Class G or Class L Global Crossing stock, and each Global Crossing
share will be exchanged for one share of either of the two Global Crossing
tracking stocks. At their option, each U S WEST and Global Crossing shareholder
may elect to receive differing percentages of the two tracking stocks, subject
to proration. The exact number of Class G and Class L Global Crossing shares to
be issued in the transaction will be in proportion to the relative valuations of
the Class G and Class L shares, as determined through an appraisal process
shortly before the transaction is completed.
As part of the transaction, U S WEST will make a cash tender offer for
approximately 39 million Global Crossing shares (or approximately 9.5% of Global
Crossing's outstanding shares) at a price of $62.75 per share. The tender offer
will commence within five business days and is expected to be completed next
month.
Annunziata, who was the founder of Teleport - the first competitive local
exchange carrier to compete head-on with regional Bell operating companies -
continued: "A decade and a half after the break-up of AT&T, competition in the
telecommunications industry has spread around the world. Today we are joining
forces with a former regional Bell operating company that knows how to compete
and offers customers a compelling array of integrated voice and data services."
Trujillo, who has created the country's most aggressive local supplier of high-
speed data services, said, "Rarely in business do we have the opportunity to
bring together two leading-edge companies to create a faster, more
entrepreneurial global competitor with unique products and solutions for both
residential and commercial customers. We are confident we can address any
regulatory issues and gain approval for the merger on a timely basis. In
addition to global scope and scale, this merger is also about innovation, speed-
to-market and superior customer service-true to the vision of Gary Winnick,
Global Crossing's founder and largest shareholder."
Annunziata and Trujillo will become Co-Chairmen and Co-CEOs of the combined
company. There will be a 22-member Board of Directors: 10 designated by Global
Crossing, 10 designated by U S WEST, and two selected by mutual agreement.
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The Board of Directors of U S WEST intends to declare a special cash dividend of
$0.215 per share payable to U S WEST shareholders in each quarter prior to
closing. This will increase U S WEST quarterly dividend payments to $0.75 per
share prior to closing. In addition, U S WEST intends to declare a one-time
special cash dividend of up to $1.00 per share (plus the proportionate share of
the unpaid special dividend in the quarter in which the merger closes) payable
to U S WEST shareholders immediately prior to closing.
Merger Benefits
Benefits of the merger, approved unanimously by the Boards of both companies,
include:
- - First Global and Local Service Provider with state-of-the-art domestic and
international backbone facilities and world-class data networking services.
- - High-quality, last-mile access; high-speed data and global reach; enhanced
ability to compete in the projected $1 trillion global telecommunications
market.
- - Leadership position in Internet services, applications support, web hosting
and e-commerce.
- - Greater ability for the local service provider to retain and grow large
business accounts in need of truly national or global voice, data and Internet
services.
- - Combination enables U S WEST, the nation's largest local digital subscriber
line (DSL) provider, to become a powerful national and global data local
exchange carrier.
- - Ability to enhance services in local markets.
- - Strong balance sheet to support further growth.
Composition of Tracking Stocks
The new Global Crossing Class G shares will include:
- - Global Crossing's state-of-the-art global fiber optic network, connecting four
continents and 39 cities in Europe, Japan and the Americas.
- - U S WEST's !NTERPRISE data networking business (including data network
integration services, Internet access, hosted applications and DSL services).
- - U S WEST's frame relay and asynchronous transfer mode (ATM) network, one of
the largest in the world.
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- - U S WEST's wireless PCS business.
- - U S WEST's Internet Yellow Pages directory business.
- - Frontier's state-of-the-art U.S. fiber optic network, connecting 120 cities.
- - Frontier's long distance business.
- - Frontier's GlobalCenter Internet web hosting and data center business.
- - Frontier's CLEC (competitive local exchange carrier) business.
- - New U.S. and international data local exchange carrier (DLEC) businesses.
The new Global Crossing Class L shares will include:
- - U S WEST's 16.6 million local telephone lines in 14 Western and Midwestern
states.
- - Frontier's 1.0 million local telephone lines.
- - The U S WEST Dex printed directory business.
- - Frontier's printed directory business.
The merger is expected to be immediately accretive to Global Crossing Class G
operating cash flow and to Global Crossing Class L earnings per share. The
transaction will be accounted for as a purchase, and is expected to be tax-free
to U S WEST and Global Crossing shareholders.
The new Global Crossing Corporation will be incorporated in Delaware,
headquartered in New York City, and have operations in Denver; Rochester, NY;
Los Angeles; the New York/New Jersey metropolitan area; Minneapolis; Phoenix;
Seattle; London; Tokyo; Amsterdam; Buenos Aires and many other locations
throughout the world.
The transaction is subject to the approval of shareholders of both companies,
expiration of the applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act, and approval by the Federal Communications
Commission and other regulatory review. It is expected to close by mid-2000.
Frontier has consented to the U S WEST transaction, and Global Crossing has
modified its merger agreement with Frontier to provide that the number of Global
Crossing shares to be received by Frontier shareholders will be adjusted to
provide a value of $63 per Frontier share as long as Global Crossing shares
trade within a range between $34.56 and $56.78 per share (the collar) during a
pricing period prior to closing of the Frontier transaction. Outside the collar,
Frontier shareholders will
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receive a fixed number of Global Crossing shares: 1.1095 shares per Frontier
share at the top end of the collar and 1.8229 shares per Frontier share at the
bottom end of the collar. If the Frontier transaction does not close by December
31, 1999, the $63 per share value will be increased by 7% per annum compounded
daily until closing (unless the Global Crossing share price is over the top end
of the collar). These modifications to the Global Crossing/Frontier merger
agreement will become effective only after shares are purchased in the U S WEST
tender offer for Global Crossing shares.
The transaction is another step in the execution of both companies' aggressive
growth strategies. In June 1998, U S WEST split off its cable assets, MediaOne
Group (NYSE: UMG), to concentrate on its telecommunications and Internet
businesses. Global Crossing announced in March 1999 that it would acquire
Frontier Corporation. Antitrust clearance has been received for the Frontier
acquisition, which is expected to close in the third quarter of 1999.
Salomon Smith Barney, Inc. and Chase Securities, Inc. served as financial
advisers to Global Crossing, and Merrill Lynch & Co. served as financial adviser
to U S WEST. J.P. Morgan & Co. is arranging a credit facility for the U S WEST
tender offer for Global Crossing shares.
About U S WEST
U S WEST provides a full range of advanced telecommunications services -
including wireline, wireless PCS, data networking, directory and information
services-to more than 25 million customers nationally and in some of the
nation's fastest growing communities in 14 Western and Midwestern states
(headquartered in Denver, its larger markets include Denver, Minneapolis,
Phoenix, Portland, Salt Lake City and Seattle). It is the nation's leader in the
deployment of digital subscriber line (DSL) technology. More information about U
S WEST can be found at www.uswest.com.
About Global Crossing
Global Crossing is building and operating the world's most advanced global fiber
optic platform for data, voice, video and Internet transmissions. The Global
Crossing network will span four continents and address 80% of the world's
international traffic. Global Crossing's operations are headquartered in
Hamilton, Bermuda, with offices in Los Angeles; New York City; Morristown, New
Jersey; San Francisco; Miami; London; Amsterdam; Tokyo; and Buenos Aires. More
information about Global Crossing can be found at www.globalcrossing.com.
Statements made in this press release that state either a company's or
managment's intentions, beliefs, expectations, or predictions for the future are
forward-looking statements. It is important to note that both companies'
actual results could differ materially from those projected in such forward-
looking statements. Information concerning factors that could cause actual
results to differ materially from those in the forward-looking statemetns is
contained from time to time in each company's filings with the U.S. Securities
and Exchange Commission (SEC) and is incorporated herein by reference. Copies of
these filings may be obtained by contacting either company or the SEC.
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Investors and analysts may contact:
Jensen Chow
310/385-5283
E-mail: jchow@globalcrossing.com
Reporters and editors may contact:
Tom Goff
310/385-5231
E-mail: tgoff@globalcrossing.com