On the heels of last week’s announced mergers involving CenturyLink-Level 3 and Crown Castle-FiberNet, Windstream Holdings and Earthlink Holdings confirmed Monday that they had agreed to merge in a stock transaction valued at $1.1 billion, including debt.
Monday’s pact between Windstream of Little Rock, Arkansas and Atlanta, Georgia-based EarthLink constitutes the third major transaction in a week among players in the U.S. market for fiber-optic business and related network services. Described as a union of complimentary networks and a creator of synergies, the proposed merger would lead to a nationwide network of 145,000 fiber route miles. In the words of Windstream CEO Tony Thomas, the combination with Earthlink “advances Windstream’s strategy by creating a stronger, more competitive business to serve our customers.” Earthlink CEO and President Joe Eazor noted that “it’s become clear that we are two companies on parallel paths” and now “is the right time for us to come together.”
Under the terms of Monday’s deal, EarthLink stockholders will receive 0.818 shares of Windstream common stock for every EarthLink share owned, which represents a 13% premium to the average exchange ratio over the month ended November 3. Upon closing, Windstream shareholders will own approximately 51% and EarthLink shareholders will own approximately 49% of the combined entity. Contingent upon receipt of shareholder and regulatory approvals, the parties expect to complete the transaction during the first half of 2017. The combined company will retain the Windstream name.