PAETEC shareholders received 0.460 shares of Windstream stock for each PAETEC share owned at closing. Windstream issued shares and assumed equity awards representing approximately 73.4 million shares of Windstream stock valued at approximately $863 million, based on the company’s closing stock price on Nov. 30, 2011. Windstream also assumed PAETEC’s net debt of approximately $1.4 billion.
“The addition of PAETEC strengthens Windstream in important ways,” said Jeff Gardner, Windstream’s president and CEO. “PAETEC brings tremendous enterprise-level expertise and product offerings to enhance our already robust business division. Its customer-focused culture dovetails with Windstream’s commitment to superior service. And its extensive fiber network and complementary markets make Windstream a formidable nationwide communications and technology solutions provider.”
The transaction is expected to be accretive to free cash flow per share, excluding merger and integration costs, in the first year.
Windstream expects to generate annual pre-tax operating cost synergies of approximately $100 million and capital expenditure savings of approximately $10 million, which are expected to be fully realized in three years. Windstream also expects to incur merger and integration costs of approximately $50 million in operating expense in the first year and approximately $55 million in capital expenditures over the first three years.
The transaction also includes tax assets with an estimated net present value of approximately $250 million.