Windstream's (Nasdaq: WIN) desire to complete its pending acquisition of PAETEC, a deal that will instantly double its business service holdings, may now face a competing offer from Level 3 Communications (Nasdaq: LVLT).
Late last week, PAETEC's shares were up 11 cents, or 2.1 percent, at $5.25 following a research note issued by David Dixon, an FBR Capital Markets analyst who intimated that the CLEC may get a better offer from Level 3.
Although it just completed its acquisition of Global Crossing last week, Dixon argues that a deal made by Level 3 would make "greater strategic sense." Dixon thinks that the service provider would be willing to pay about $7.30 per share.
In August, Windstream pledged $2.3 billion, or 0.46 of its own shares for each PAETEC share. PAETEC's board plans to vote on the Windstream deal at the end of October.
News of a competing bid should not be that surprising. A number of shareholders believe that PAETEC's shares are worth at least $7 and have asked Boston-based Kyros & Pressly LLP and San Diego-based Robbins Umeda LLP to investigate whether or not PAETEC's board is getting the right price for the CLEC.
- CNBC has this article
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