Cincinnati Bell to Buy IXC in Stock Deal

Regional phone company Cincinnati Bell Inc. agreed to buy telecommunications service provider IXC Communications Inc. for about $2.1 billion in stock. The deal is aimed at propelling Cincinnati Bell’s burgeoning presence in fast-growing businesses such as the Internet, data transmission and wireless. Originally worth $2.2 billion in stock based on Tuesday’s closing stock prices, the value of the deal slipped to about $2.1 billion, or $41.56 per share of IXC, by Wednesday’s close. Shares of Cincinnati Bell dropped $3.75 to close at $19.81 on the New York Stock Exchange, while Austin, Texas-based IXC gained $3.50 to close at $39.75 on Nasdaq. Cincinnati Bell fell on several factors, including investor concern that the company is pursuing an extremely aggressive growth plan and a warning from IXC that its latest quarterly earnings won’t meet analysts’ expectations. Under the deal, IXC shareholders would receive 2.0976 shares of Cincinnati Bell for each IXC share. Cincinnati Bell also would assume $700 million in IXC debt. Cincinnati Bell also agreed to buy 5 million shares of IXC from General Electric Pension Trust for $50 a share. The trust would still own 5 million shares of IXC after that transaction. Separately, Cincinnati Bell reported a 76% increase in second-quarter operating earnings to $28.3 million, or 20 cents a share, on a 16% increase in revenue to $253.6 million.