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PAETEC to Buy McLeodUSA for $492M
PAETEC to Acquire Privately Held McLeodUSA for $492M in Stock and $65M in Debt
September 17, 2007: 08:13 AM EST
NEW YORK (Associated Press) - Communications provider PAETEC Holding Corp. said Monday it plans to acquire privately held competitor McLeodUSA Inc. for $492 million in stock.
The deal, which includes the assumption of $65 million in debt, will expand PAETEC's voice and data operations into 18 additional states and add markets such as Dallas, Denver, Houston, Phoenix and Seattle.
McLeodUSA shareholders will receive 1.3 shares of PAETEC stock for each share of McLeodUSA stock they own. PAETEC plans to issue about 40 million shares of stock to McLeodUSA shareholders.
"This transaction offers clear financial and customer benefits, including a significant de-leveraging of our balance sheet and the potential realization of $30 million in annual combined cost and run-rate synergies," PEATEC Chief Financial Officer Keith Wilson said in a statement.
PAETEC said the combined company would have generated $1.6 billion in revenue and $263 million in adjusted earnings before interest, tax, depreciation and amortization in the year ended June 30, 2007. The Fairport, N.Y.-based company, which provides communication services to commercial and institutional clients, expects the acquisition will result in savings of about $20 million in the first year.
The deal is expected to close in the first quarter of 2008.
The ox is slow,but the earth is patient.
