Consolidated Communications To Buy FairPoint In a $1.5 Billion Stock And Debt Deal

Consolidated Communications Inc. announced Monday an agreement to buy FairPoint Communications Inc. in an all-stock deal valued at $1.5 billion, including debt. Under terms of the deal, FairPoint shareholders will receive 0.7300 Consolidated shares for each FairPoint share they own. Based on Friday's closing prices, that values FairPoint shares at $20.72, or a 22% premium and implied a market value for FairPoint of $560.9 million. The deal, which is expected to close by mid 2017, is expected to generate annual synergies of $55 million, and should added to cash flow per share in the first year. "The financial benefits associated with the combination in the form of synergies and reduced leverage provide us additional operating and strategic flexibility going forward," said Consolidated Chief Executive Bob Udell. The stocks are still halted for news until 7:30 a.m. ET. FairPoint shares have gained 5.8% year to date through Friday, while Consolidated's stock has run up 35% and the S&P 500 has tacked on 7.2%.