Level 3 Shares Rise on M&A Report

Shares in Level 3 Communications rose almost 4% Wednesday amid a report that the company is seeking strategic options, including a possible sale.

Comcast is a potential suitor for Level 3, Bezinga reported, citing an unnamed industry source. Bezinga also pointed to a research note issued late last by Cowen & Co. analyst Colby Synesael speculated late last year that Comcast could pursue Level 3 to bulk up its enterprise business capabilities in order to expand competition with AT&T and Verizon.

Notably, Comcast Business launched a new initiative last fall that targets Fortune 1000 companies. Comcast Business pulled down $1.31 billion in revenues in Q1 2016, establishing an annual run-rate of $5.2 billion, with the bulk of that revenue still coming way of small business customers.

Comcast and Level 3 have been asked for comment.

Update: Level 3 said it doesn't comment on rumors or speculation. Comcast also declined to comment. 

Broomfield, Colo.-based Level 3 has a market cap of about $20.15 billion and serves customers in more than 60 countries.

Level 3 and Comcast also have a checkered history.

In 2010, Level 3 and Comcast quarreled over a contentious peering dispute, with Level 3 arguing that Comcast was erecting a “toll booth” on the Internet soon after Level 3 landed a deal to be a primary content delivery channel for Netflix streaming traffic. Comcast and Level 3 cut a new interconnection deal in 2015 aimed at maintaining ample capacity to exchange Internet traffic between their networks, and an agreement that seemingly put that previous bad blood behind them.