Teleglobe Inc., a global wholesaler of telecommunications services, and Excel Communications Inc., a U.S. long-distance provider, said they have agreed to merge in a $3.2-billion stock swap.
The deal will combine the global telecommunications services of Montreal-based Teleglobe with the commercial and residential long-distance and paging services that Excel offers in the U.S.
Other services the companies provide range from telephone calling cards to Internet access.
The combined company, which will keep the Teleglobe name, will have 6 million residential and 65,000 business customers and handle telephone traffic for 275 other carriers around the world, officials said.
The merger is the latest step in the ambitious plan by Teleglobe's 44-year-old chairman and chief executive, Charles Sirois, to transform the once ailing company into a retail phone services provider in North America, Europe and beyond.
Analysts applauded the merger, saying Sirois has been methodically transforming Teleglobe since he became chief executive six years ago.
"They have been wanting to go into the retail thing. It accelerates their move and that's good," said John Drolet, of Yorkton Securities Inc.
In the transaction, which the companies said was being structured as a pooling of interests, Teleglobe will exchange 0.885 shares of its stock for each share of Excel. Although the companies said the transaction was a "merger of equals," current Teleglobe shareholders will own 51.5% of the new company.
BCE Inc., Canada's largest telecommunications concern with a 24% stake in Teleglobe, said it supported the merger.
In New York Stock Exchange trading Monday, Excel's shares plunged $5.81 to close at $21.75. Teleglobe rose 50 cents to close at $52.13.
The deal creates a company with 4,800 employees.