Windstream agreed to acquire PAETEC Holding Corp. for approximately $2.3 billion.
PAETEC is a competitive local exchange carrier and provides telecommunications services primarily to business customers in 46 states and the District of Columbia. The company operates seven data centers in the U.S. and owns approximately 36,700 route miles of fiber in portions of 39 states and the District of Columbia. It has approximately 5,000 employees, including about 875 in the Rochester, N.Y. area. The company was founded in 1998.
Windstream, headquartered in Little Rock, Ark., is an S&P 500 company with operations in 29 states and the District of Columbia and about $4 billion in annual revenues. Windstream provides IP-based voice and data services, MPLS networking, data center and managed hosting services and communication systems to businesses and government agencies. The company also delivers broadband, digital phone and high-definition TV services to residential customers primarily located in rural areas and operates a local and long-haul fiber network spanning approximately 60,000 route miles.
The new combined company will serve business customers in 46 states and the District of Columbia and maintain approximately 100,000 fiber route miles across the country. Windstream will offer data center services across the United States and have improved capability to serve multi-location business customers. It would have had $6.1 billion in total revenue and about $2.4 billion in adjusted operating income before depreciation and amortization, which excludes non-cash pension expense, restructuring charges and stock-based compensation expense, on a pro forma basis for the last 12 months ended March 31, 2011. Business and broadband revenues would have comprised approximately 70 percent of total revenue.
Windstream has received $1.1 billion in committed financing in connection with the acquisition, which financing would be required if Windstream refinances the assumed debt. Windstream also will assume or refinance PAETEC's net debt of approximately $1.4 billion at the time of closing. PAETEC stockholders are expected to own approximately 13 percent of the combined company upon closing of the transaction.
"This transaction significantly advances our strategy to drive top-line revenue growth by expanding our focus on business and broadband services," said Jeff Gardner, president and CEO of Windstream. "The combined company will have a nationwide network with a deep fiber footprint to offer enhanced capabilities in strategic growth areas, including IP-based services, data centers, cloud computing and managed services. Financially, we improve our growth profile and lower the payout ratio on our strong dividend, offering investors a unique combination of growth and yield." http://www.windstream.com http://www.paetec.com
- In December 2010, PAETEC acquired privately-owned Cavalier Telephone for $460 million, making it one of the largest competitive local communication service providers in the United States. The acquisition includes Cavalier's wholly owned subsidiary, Intellifiber Networks, which operates a high capacity fiber network spanning approximately 16,600 route miles and representing over $2 billion of investment by companies Cavalier acquired over the last decade. The expansive 11,947 route-mile intercity network spans the Midwest and Eastern U.S., as well as 4,681 route miles throughout several existing PAETEC metro areas, allowing for broad connectivity options for customers. With this deal complete, PAETEC now has over 10,600 metro fiber-route miles, over 36,700 total fiber-route miles, and 1,178 collocations to support connectivity to enterprise businesses nationwide.
- In June 2010, Windstream acquired Iowa Telecommunications Services, Inc. in a transaction valued at approximately $1.2 billion. As of March 31, 2010, Iowa Telecom provided service to approximately 249,000 access lines, 96,000 high-speed Internet customers and 27,500 digital TV customers in Iowa and Minnesota.
- In July 2006, Alltel completed the spin off its wireline business, which was merged with VALOR Communications Group to create Windstream, a major wireline operator focused on the rural U.S. market.
- In 2007, Windstream acquired CT Communications (NASDAQ: CTCI) for $585 million, adding approximately 158,000 access lines and 29,000 broadband customers. CT Communications served residential and business customers located primarily in North Carolina.
Windstream is based in Little Rock, Arkansas.
