Global Crossing, Asia GX Nix Merger

As sudden as it was to proposed, a merger between two global IP hopefuls comes undone. Both companies undo potential pairing because of current market conditions.

by Bob Woods OpticallyNetworked.com Managing Editor [November 7, 2001]

In a sudden reversal of fortune, Global Crossing Ltd. (NYSE:GX) and Asia Global Crossing Ltd. (NYSE:AX) said that a merger proposed last month between the two companies is now off.

Global Crossing and Asia Global Crossing, in a statement issued late Monday, said that they terminated discussions regarding a merger due to "current market conditions." Both companies said they may "re-evaluate the merits of a merger in the future."

Neither company commented further in their joint statement.

On October 4, Global Crossing floated the idea of a merger with its Asian counterpart prior to its third quarter conference call. At the time, it was thought that the U.S. IP bandwidth provider, with a 59 percent ownership stake in Asia Global Crossing, would try to convince shareholders and directors to sign off on the merger.

With the merger, Global Crossing would have both cut costs and expanded its network as it fought decreasing prices, weak revenue generation and a telecom market hard hit by economic woes.

Both companies cited "continuing consolidation in the telecommunications industry and the evolving needs of their global customers" for their decision to start talking.

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