Buys and Bye, Bye

Level 3 Communications Inc. announced that it would be acquiring Global Crossing Ltd., while Texas Instruments Inc. (TI) said that is has agreed to purchase rival National Semiconductor Corp. In other news, Oracle Corp. has had a change of heart, and has decided to turn OpenOffice into a purely community project.

Focal Points:

• Level 3 is acquiring Global Crossing in a tax-free, stock-for-stock transaction valued at approximately $3 billion, or $23.04 per share, including the assumption of $1.1 billion of debt. According to the two vendors, the combined company will operate a global services platform that runs on fiber-optic networks on three continents. More specifically, the new entity will be able to serve a customer set with owned network in more than 50 countries and connections to more than 70 countries, the vendors added. The combined company will offer content, enterprise, government, Web-based, and wholesale customers with end-to-end data, video, and voice solutions. It will have pro forma combined 2010 revenues of $6.26 billion, and meet local, national, and global customer requirements in a wide range of markets, the announcement also states. As a result of the deal, Level 3 said that Singapore Technologies Telemedia, Global Crossing's biggest shareholder, will become a significant investor, and that the combined company will begin delivering free cash flow from 2013.
• TI announced that it would purchase National Semi for $6.5 billion, enabling TI to expand its portfolio of semiconductor products. TI has agreed to pay stockholders $25 per share of National Semi common stock that they hold at the time of the deal's closure. It intends to fund the deal through cash balances and debt, per the announcement. According to TI, the combined company will offer 42,000 analog-chip products, and sales of those products will provide about half of TI's overall revenue. As a result of the acquisition, TI will gain National Semi's manufacturing operations in Maine, Malaysia, and Scotland, adding that each site has room for increased production. The deal is expected to close in six to nine months. TI said that National Semi's headquarters will remain in Santa Clara, California. 
• Oracle said that it is turning OpenOffice into a purely community project, and no longer plans to offer a commercial version of the collaboration suite. The Oracle announcement stated that the company believes that OpenOffice would be best managed by an organization focused on serving the broad constituency on a non-commercial basis. Therefore, Oracle intends to begin working immediately with community members, while continuing to support the adoption of open standards-based document formats. This news is a massive turnaround for Oracle. Nearly seven months ago, the vendor refused to relinquish power over OpenOffice, which it inherited through its acquisition of Sun Microsystems. Oracle offered no reason for its sudden change of heart on its OpenOffice strategy.

Experton Group believes the mergers in the fiber and fabs markets are additional indications that the technology consolidation trend is still going strong. Although mergers frequently result in price increases, this is not likely to occur and the trend towards cheaper chips and per-unit network fees will continue apace. The Oracle realization that its actions only gained it needless negative publicity and animosity is good news. Now the OpenOffice community can drop the obscure Libre Office product name and return to using the more recognized OpenOffice brand. IT executives should welcome the change of heart and add (or keep) OpenOffice on its short list of office productivity suite alternatives.