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Updated from 2:57 p.m. EDT

Fiber optic network company

Global Crossing


said Wednesday that it agreed to sell its U.S. local phone business to

Citizens Communications

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( CZN) for $3.65 billion in cash.

In response to the news, Global Crossing stock soared, finishing up 2 15/16, or 10.1%, at 32 1/16. Citizens Communications was relatively unchanged, finishing up 1/8, or 0.7%, at 18 13/16.

Global Crossing said the deal would streamline its North American operations and allow it to focus on developing its global, high-speed fiber optic networks. The company said it will use the proceeds to both pay down debt and to invest in its network.

Hamilton, Bermuda-based Global Crossing's local phone business is the tenth largest in the U.S., with 1.07 million access lines. About half of the operations are in the Rochester, N.Y., area, with the remainder in 13 states, including, most notably, Minnesota, Iowa, Wisconsin and Pennsylvania. Revenue for the division was about $805.2 million last year.

Once completed, Citizens Communications, based in Stamford, Conn., will have more than 3 million access lines in over 22 states.

The deal is subject to both federal and state regulatory approval, which is expected to take nine months to obtain.