(Telecompaper) Level 3 Communications has agreed to buy tw telecom for a combination of cash and shares, valuing the operator at USD 7.3 billion including debt. Tw shareholders will receive USD 10 cash and 0.7 shares of Level 3 common stock for each share of tw telecom they own. This values tw telecom at USD 40.86 per share, versus USD 36.34 at closing the day before the deal was announced. The takeover substantially strengthens Level 3's North American network, providing key network assets and building connections. The company expects USD 200 million in annual adjusted EBITDA savings and USD 40 million in capex savings from the takeover. In total, the net synergies are estimated at USD 2 billion, and around 70 percent of the EBITDA savings should be realised within 18 months of closing the takeover. Level 3 estimates the one-time integration costs at USD 170 million. It expects the transaction to add to free cash flow per share a year after the deal closes. Despite taking on USD 1.6 billion in debt from tw, Level 3 said the enlarged group will have lower leverage. The company has secured USD 3 billion in financing for the takeover and the support of its largest shareholder, ST Telemedia with a 23 percent stake. Pending regulatory and shareholder approval, the acquisition is expected to close in Q4.