Consolidated Communications has reached an agreement to acquire all 13.8 million shares of Enventis, formerly HickoryTech, for about $350 million, marking yet another element in the ongoing consolidation of the independent telco market.
Under the terms of the agreement, Enventis shareholders will get a fixed exchange ratio of 0.7402 shares of Consolidated common stock for each share of Enventis common stock they own. The companies said that based on the closing price of Consolidated shares on June 27, 2014, the consideration represents $16.50 per share for each Enventis share outstanding, equating to a premium of 17.4 percent over Enventis' closing price on June 27, 2014, or 27.2 percent over the past 90-day average share price.
When the deal is completed, the combination of Consolidated and Enventis will create a company with about $785 million in revenue and $332 million in adjusted EBITDA for the 12 months ending March 31, 2014.
One of the key assets Enventis brings to the table is its fiber assets. Enventis' fiber network already spans 4,200 route miles serving its facilities-based business and wholesale customers in Minnesota and into Iowa, North Dakota, South Dakota and Wisconsin. As a combined company, Consolidated will have a fiber network that extends across 11 states.
In addition to the fiber assets, Enventis currently has 39,000 access lines, 21,000 high-speed internet customers, 12,000 digital TV customers and 90 fiber-to-the-tower sites. It also operates six data centers and has a full suite of business communication and IT services including its recent launch of new and expanded cloud and managed services.
"Enventis has built a strong business delivering competitive business and broadband services over a 4,200 route mile fiber network," said Bob Currey, Consolidated Communication's chairman and CEO, in a release announcing the merger. "The combination and additional markets creates a broader platform from which to grow and expand."
Both telcos continue to see an uptick in their fiber-based service revenues, particularly Ethernet.
Consolidated reported that in the first quarter of 2014, a rise in Metro Ethernet revenue drove up overall first-quarter 2014 data, video and Internet services revenue to $68.2 million. Likewise, Enventis reported that first-quarter 2014 fiber and data segment net income was $1.7 million, an 81 percent year-over-year increase.
Set to close in the fourth quarter, the boards of both companies have already approved the deal, which will require federal and state regulatory approvals and the approval of both Consolidated and Enventis' shareholders.
- see the release
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