tw telecom is prime acquisition target, says Corvex's Meister

May 8, 2013 | By Sean Buckley


tw telecom's (Nasdaq: TWTC) shares jumped 7.2 percent to $29.12 on Wednesday afternoon after being cited by Keith Meister, founder and managing partner of New York-based Corvex, as a prime acquisition target.

Meister said during the Sohn Investment Conference in New York that Level 3 Communications (NYSE: LVLT), Time Warner Cable (NYSE: TWC) or Verizon (NYSE: VZ) could be prime suitors for tw telecom, which has established itself as one of the largest domestic Ethernet and VPN service players.

"There are lots of people who at the right time would want to buy this company," Meister said.

During the session, tw telecom's stock rose to $29.24, its highest rise since August 2011. Meanwhile, Level 3 rose nearly 6.7 percent to $24.76.

tw telecom has been a continually profitable CLEC, particularly in selling Ethernet and VPN services to businesses. In Q1 2013, tw telecom reported that strong Ethernet and VPN product sales drove up data and Internet services revenue 14.3 percent, or $25 million, year-over-year to $202 million.
This is not the first time that the subject of tw telecom being an acquisition target has come up.

Last fall, rumor emerged that CenturyLink (NYSE: CTL) was interested in purchasing tw telecom. These rumors emerged after an article in The Denver Post cited a report in DealReporter where unnamed sources said the two service providers had been talking about a deal for a number of weeks.
At that time, Level 3 also expressed interest in the service provider, but did not agree on how much tw telecom thought its business was worth.