Telecommunications company Windstream (NYSE:WIN) reached an all-stock deal on Monday to snatch local-exchange carrier Paetec Holding (NASDAQ:PAET) for $891 million..
When $1.4 billion of debt is included, the bid for Fairport, N.Y.-based Paetec is worth $2.3 billion.
Windstream, which provides communications and technology solutions, offered to pay 0.46 in stock for each share of Paetec, valuing the company at $5.62 a share. That gives the deal a 27% premium on Paetecs Friday close.
The deal creates a national telecom provider with more than $6 billion in total revenue and a network of about 100,000 fiber route miles.
This transaction significantly advances our strategy to drive top-line revenue growth by expanding our focus on business and broadband services," Windstream CEO Jeff Gardner said in a statement.
The companies expect the combination to generate $100 million in annual pre-tax operating cost synergies and tax benefits of $250 million. Windstream sees the deal adding to its bottom line, excluding merger and integration costs, in its first year.
Shares of Windstream flatlined, slipping just 0.08% to $12.19 Monday morning, while Paetec climbed 18.55% to $5.24.