Windstream may have yet to make a big acquisition of one of its tier 2 peers, but that's not to say it isn't making strategic acquisitions either. Evidence of that trend came yesterday as the tier 2 ILEC announced it was snapping up Greenville, S.C.-based CLEC NuVox for about $643 million.
The acquisition, as explained in a release by Windstream President and CEO Jeff Gardner, is to expand its "broadband and business revenues, which is important given the growth prospects in these areas." Indeed, with the purchase of NuVox, Windstream instantly gains about 90,000 business customers leveraging IP-based services in what it says are complementary markets in 16 Southeast and Midwest states.
To fund the deal, Windstream says it will issue about 18.7 million fixed shares of stock valued at $183 million, a figured based on Windstream's closing stock price on November 2, 2009, and then pay about $280 million in cash for NuVox. Windstream will also take on $180 million in estimated net debt and will finance the deal with existing cash and existing capacity on its own revolving credit agreement.
Out of the top three tier 2 ILECs, Windstream has arguably been the most conservative on the merger and acquisition front. Rumors emerged earlier this year that Windstream would purchase the beleaguered FairPoint Communications, but nothing has come of those rumors. Although it certainly could and may in the future take part in a big acquisition or merger with another tier 2 service provider, Windstream has been content to purchase smaller independents such as D&E Communications and now a CLEC NuVox.
- see the release here
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