Windstream to buy Iowa Telecom for $1.1 billion to expand reach into Iowa and Minnesota
By APTuesday, November 24, 2009
Windstream to buy Iowa Telecom for $1.1 billion
LITTLE ROCK, Ark. — Phone company Windstream Corp. announced Tuesday it would buy Iowa Telecommunications Services Inc. for $1.1 billion in cash and stock, and pick up a quarter-million subscribers in Iowa and Minnesota.
Little Rock-based Windstream will take on nearly $600 million in Iowa Telecom debt.
The transaction will also give Windstream 95,000 high-speed Internet customers and 26,000 video subscribers. The deal is expected to close in mid-2010.
The announcement drove Iowa Telcom shares sharply higher in Tuesday trading.
Windstream said it expects “annual synergies” of $35 million, saving money on capital expenditures and operating expenses. Windstream spokesman David Avery said the savings will come in a number of areas, “including corporate administration and network expense.”
The company is also to look at possible job cuts.
“It’s premature to speculate on the number of positions that may be affected through the transaction,” Avery said. “We will conduct a joint transition process with Iowa Telecom to evaluate overall staffing needs and identify redundant functions.”
Windstream was formed in 2006 when it was spun off from Little Rock-based Alltel Corp. and merged with Valor Communications Group of Irving, Texas, in a $4.9 billion deal. Alltel has since been gobbled up by Verizon Wireless.
Windstream has been working to expand this year. Three weeks ago Windstream announced it would buy NuVox Inc. for $643 million, and in May, Windstream said it would buy D&E Communications Inc.
Once the deals are complete, Windstream will be in 23 states, up from 16. Windstream entered the transactions with 3 million access lines, 1 million high-speed Internet customers, 7,300 workers and $3.1 billion in revenue for 2008.
Iowa Telecom shareholders will get 0.804 shares of Windstream stock and $7.90 in cash for each share they own. Windstream is to pay $261 million, and the company says it will finance the cash portion of the transaction and the repayment of Iowa Telecom’s debt with proceeds from a debt financing or additional bank borrowings.
The deal, which is expected to close in mid-2010, is subject to state and federal regulatory approval, and Iowa Telcom shareholders also must approve the transaction.
Boards of both companies approved the buyout. The companies also announced that Iowa Telecom Chairman and CEO Alan Wells will join Windstream’s board.
Iowa Telcom shares were up 25 percent, or $3.18 per share, at $15.87 in midday trading Tuesday. Shares in Windstream were down 15 cents at $9.98.
Tags: Arkansas, Iowa, Iowa telecom, Little Rock, North America, Ownership Changes, Personnel, Products And Services, United States