Windstream To Buy NuVox; Rural Telco M&A Continues
03 Novembre 2009 - 4:05PM
Dow Jones News
Windstream Corp. (WIN) said Tuesday it agreed to acquire NuVox
Inc. in a deal valued at $643 million, another illustration of the
consolidation in the rural telecommunications industry.
Since May, Windstream has scooped up three smaller rural telcos
in deals with a combined value of more than $1.1 billion. For
privately held NuVox, Windstream will pay $280 million in cash,
issue $183 million in stock and assume $180 million in debt. The
company plans to use its existing cash and tap its revolving credit
line to fund the deal.
Windstream and other rural telcos are scrambling to buy up each
other to boost size and pass their sizeable capital expenditures
across a wider base of customers and gain purchasing power when
buying telco gear. The telcos continue to face pressure as cable
providers poach customers with their own rival phone services,
while other consumers cancel their lines to go solely with the
cellphones.
NuVox also brings a sizeable business presence for
Windstream.
"This transaction significantly advances our strategy to grow
broadband and business revenues, which is important given the
growth prospects in these areas," Windstream Chief Executive Jeff
Gardner said in a statement.
The deal, which is expected to close in the first half of next
year, is expected to save $30 million in annual operating expenses
and capital expenditures, the company said. It is expected to add
free cash flow in the first full year of combined operation, as
well as lower its dividend payout ratio. The boards of both
companies have approved the deal.
NuVox brings to the table operations in 16 states and roughly
90,000 business customers. Windstream operates in 16 states and
boasts 3 million access lines.
In May, Windstream entered into an agreement to buy D&E
Communications Inc. (DECC) for $159 million in cash and stock, in
addition to absorbing $171 million in debt. In September, the
company agreed to buy Lexcom Inc. (LXCM) for $141 million in
cash.
Windstream shares were down 0.3% to $9.76 early Tuesday.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153;
roger.cheng@dowjones.com
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