Windstream completes $1.1B EarthLink acquisition, advances business network, services reach

Windstream & EarthLink deep fiber nationwide network
Windstream and EarthLink have satisfied all necessary customary closing conditions, including approval from shareholders of both Windstream and EarthLink.

Windstream has wrapped up its $1.1 billion acquisition of EarthLink, creating a larger service provider that will have a broader reach of network assets to better serve an array of small to large business customers.

Under the terms of the agreement, EarthLink shareholders receive 0.818 shares of Windstream common stock for each EarthLink share owned. Windstream said that no fractional shares of its common stock were issued in the merger, and EarthLink stockholders will receive cash in lieu of any fractional shares.         

Windstream and EarthLink have satisfied all necessary customary closing conditions, including approval from shareholders of both Windstream and EarthLink.

RELATED: Windstream’s EarthLink acquisition will provide network, financial synergies, says analyst

The combined company, which will retain the Windstream name, will be headquartered in Little Rock, Arkansas, and maintain offices in key U.S. markets.

For business customers, the value is that they will be able to get not only a larger set of network assets including Windstream’s growing on-net fiber footprint, but also access to key services like SD-WAN.

EarthLink has already established a growing SD-WAN footprint, announcing that it has deployed the solution for 41 customers across 1,706 locations. Interestingly, 95% of these customers have opted for EarthLink SD-WAN Concierge, illustrating customers’ growing interest in a fully managed services offering.

While a bit later to the game, Windstream also introduced its SD-WAN solution in January. The service provider can now combine its SD-WAN capabilities, including custom-designed networks and services, as well as a support team, with EarthLink’s to provide a consistent customer experience.  

"Our customers will benefit from our expanded national fiber footprint and enhanced products and services, including SD-WAN, UCaaS, network security, managed services and cloud connectivity,” said Tony Thomas, CEO of Windstream, in a release.

Cowen and Company agreed with Windstream’s assessment.

“In addition to scaling the platform and leveraging EarthLink’s new routes, merger will combine the best of both product sets (especially bullish on EarthLink’s SD-WAN solution) and leverage their respective sales vertical expertise (EarthLink retail/restaurants, Windstream healthcare and government),” Cowen and Company wrote in a research note earlier this month.

Now that the acquisition is completed, the next key proof point for Windstream will be in their ability to integrate the network and operational assets into its own fold. The service provider will need to have processes and practices in place to ensure that it can avoid the issues that plagued fellow telco Frontier after completing its acquisition of Verizon’s properties in California, Texas and Florida, for example.

Windstream will announce its fourth quarter earnings on Wednesday and it’s likely that much of the earnings discussion will center on the synergies it will gain from acquiring EarthLink.