• Advances strategy to grow broadband and business revenues, which will represent more than half of total revenue after the transaction closes • Drives free cash flow accretion in first full year through $30 million in annual expense and capital savings and lowers dividend payout ratio • Adds approximately 90,000 business customers in complementary markets in 16 states across the Southeast and Midwest
Windstream Corporation (NYSE: WIN) announced today that it has entered into a definitive agreement to acquire NuVox, Inc., a privately held competitive local exchange carrier based in Greenville, S.C., in a transaction valued at approximately $643 million.
Windstream expects to issue approximately 18.7 million fixed shares of stock valued at $183 million, based on Windstream's closing stock price on Nov. 2, 2009, and pay approximately $280 million in cash as part of the transaction. Windstream also will assume estimated net debt of approximately $180 million. Windstream intends to finance the acquisition with existing cash and current capacity on its revolving credit agreement.
"This transaction significantly advances our strategy to grow broadband and business revenues, which is important given the growth prospects in these areas," said Jeff Gardner, president and CEO of Windstream. "NuVox has a strong performance record of growing revenues and improving margins and offers the potential for continued business growth. The transaction will be accretive to Windstream's free cash flow in the first full year and lowers our dividend payout ratio, which is a key element of our acquisition philosophy."
"At NuVox, we are excited about the opportunity to combine our products, operating platforms, and sales distribution for the business enterprise market with Windstream's strong market presence, superb record of performance, and substantial financial strength," said Jim Akerhielm, CEO for NuVox. "This transaction is clearly the optimal path forward for our customers, our employees, and our shareholders."
Broadband and business revenues will represent more than half of Windstream's total revenue after the transaction closes. Additionally, NuVox's complementary footprint allows Windstream to strengthen its presence across the Southeast and Midwest, providing expanded reach to focus on small and medium business growth opportunities.
Windstream estimates the transaction will be accretive to free cash flow after expected annual synergies of approximately $30 million in operating expenses and capital expenditure savings.
The boards of both companies have approved the transaction, which is expected to close in the first half of 2010, subject to certain conditions, including necessary approvals from federal and state regulators.
NuVox is a leading regional competitive local exchange carrier with 48 locations in 16 contiguous Southeastern and Midwestern states. The company offers advanced IP-based voice and data services to approximately 90,000 business customers. The company has approximately 1,700 employees, including about 700 in Greenville. Windstream expects to maintain a significant employment presence in Greenville to manage sales and service for the company's combined competitive local exchange properties after the transaction closes.
NuVox generated $561 million in revenue and $115 million in operating income before depreciation and amortization (OIBDA), adjusted to remove the impact of merger, integration and other non-recurring items, in the twelve months ended June 30, 2009.
Windstream Investor Relations 4001 Rodney Parham Road Little Rock, AR 72212 (866) 320-7922
NuVox Two North Main Street Greenville, SC 29601 (864) 672-5000 or (877) 466-8869
Windstream Corporation is an S&P 500 company that provides phone, high-speed Internet and high-definition digital TV services to customers in 16 states. The company also offers a wide range of IP-based voice and data services and advanced phone systems and equipment to businesses and government agencies. The company has approximately 3 million access lines and about $3.1 billion in annual revenues. Windstream is ranked 4th in the 2009 BusinessWeek 50 ranking of the best performing U.S. companies. For more information about Windstream, visit www.windstream.com.
NuVox delivers customized managed communications services, information technology, data, security, and voice solutions designed specifically for business customers. NuVox serves approximately 90,000 customers in the Southeast and Midwest, and provides select services throughout the United States. NuVox delivers services via its industry-leading MPLS-based wide area private IP network. NuVox has been certified by Cisco and is a member of the Cisco Powered Program for VoxNET, the company's MPLS wide-area networking solution. In addition to retail solutions, NuVox also provides services to government and wholesale customers. For more information, visit www.nuvox.com.