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Level 3 To Buy WilTel

BROOMFIELD, Colo. — Level 3 Communications Inc. has agreed to acquire the second generation of the broadband company known as WilTel Communications Group for $680 million.

The original WilTel, spun from Williams Companies (Tulsa, Okla.), built one of the first U.S. broadband fiber networks in the late 1980s, and became a pioneer in frame-relay services.

Level 3 is acquiring WilTel from Leucadia National Corp., a New York-based financial conglomerate which picked up controlling interest in WilTel in 2003.

Level 3 is offering $370 million in cash and 115 million shares of stock in a deal that will give the company 3,000 more route miles of backbone, and an existing contract WilTel holds with SBC Communications Inc. Also included in the deal is WilTel’s video services subsidiary, Vyvx. The deal does not include WilTel’s headquarters, or $358 million in debt.

In its first generation, WilTel spun off from Williams Pipe in the late 1980s, making use of a special oil pipe cleaning machine invented by Williams that drew fiber cable throughout the petroleum distribution network of the parent. WilTel used the fiber to offer physical-layer services, and also hired an engineering team that pioneered frame relay in the early 1990s. It was one of the first to launch Asynchronous Transfer Mode in 1993.

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