Bermuda-based Global Crossing, a fiber-optic provider, agreed to buy Frontier, a long-distance and local carrier, for $62 a share, or $11.2 billion in stock. The companies said the merger would create the first owned and operated global Internet protocol-based fiber optic network able to provide customers with integrated worldwide Internet, data, long distance, local telephone and conferencing services.
columnist Herb Greenberg broke the story
In light of the deal,
analyst Richard Klugman cut his rating on Global Crossing to market outperform and removed it from his recommended list. But Klugman told
that he "likes the deal a lot" and remains positive on Global Crossing; he just thinks the company will need to take "a bit of a pause here" as it absorbs Frontier. Klugman compared the deal to the acquisition by
of long-distance carrier
last year. Qwest also took a hit before the deal paid off, Klugman said.
Global Crossing was off 4 1/2, or around 9%, at 47, while Frontier was up 7 9/16, or 17%, at 52 3/16.
were higher after
upgraded the stock to long-term buy from accumulate with a price target of 30. Merrill kept Novell at near-term accumulate. Novell was up 1 7/8, or 7.8%, at 25 15/16.
Also on the rise is
, which beat earnings estimates Tuesday. Progress reported earnings of 35 cents a share, easing past the 28-cent-a-share estimate from
. The stock was up 4 1/4, or 14.6%, at 34 1/4.
rose on news of a linkup with
Internet Explorer. RealNetworks was up 14, or 12%, at 129.