PAETEC's Windstream deal faces shareholder scrutiny

Windstream (Nasdaq: WIN) may have reached a $2.3 billion deal to purchase PAETEC (Nasdaq: PAET) last week, but the deal is far from done as two law firms are now investigating whether PAETEC sold itself short.

Boston-based Kyros & Pressly LLP and San Diego-based Robbins Umeda LLP are conducting investigations on behalf of PAETEC's shareholders.  

Under the terms of the deal set by both service providers, PAETEC's shareholders would get 0.46 shares of Windstream for every share of PAETEC stock, with PAETEC shareholders set to own 13 percent of the new company when the deal closes later this year. When looking at Windstream's July 29 closing price, PAETEC shareholders would get about $5.62 a share.

However, Robbins Umeda argues that a number of well-known financial analysts believe PAETEC's stock is worth $7.00 a share.

Robbins Umeda said its probe "focuses on whether PAETEC's board is undertaking a fair process to obtain maximum value and adequately compensate shareholders in light of the company's recent positive financial results."

Likewise, Kyros & Pressly argues that another analyst also believes PAETEC has a $7 per share target price. Kyros & Pressly is looking into whether PAETEC's board of directors did not do enough due diligence to find the best deal for the service provider and if shareholders are being underpaid.  

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