A map from Windstream's website shows its coverage
(WEB HOST INDUSTRY REVIEW) — Telecommunications giant Windstream (www.windstream.com) announced on Monday its plan to acquire telecommunications and web hosting provider Paetec Holding Corp (www.paetec.com) for about $891 million in stock to expand its broadband business. Windstream expects the deal to close within six months, according to a report by Reuters.
This is Windstream’s second major acquisition in the hosting space in the past eight months after the company acquired web host Hosted Solutions in December 2010. Windstream paid $310 million in cash for Hosted Solutions, in a move to grow its business enterprise and cloud computing market.
As customers move away from the phone, and businesses rely on other means of communication and connectivity, Windstream is keeping relevant by buying up data center and hosting service providers. With an infrastructure operating in 29 states, it is in position to grow its customer base, and also offer existing customers other complementary services in the data center, cloud computing and hosting services market.
According to Reuters, Paetec stockholders will get 0.460 Windstream share. Stockholders are expected to own about 13 percent of the combined company once the deal closes.
Windstream will also refinance about $1.4 billion of Paetec’s debt, according to the report.
The companies claim the deal will provide about $100 million in annual pre-tax operating cost savings and tax benefits of about $250 million.
The combined company will have more than $6 billion in annual revenue and a network covering approximately 100,000 miles in 46 states.
Windstream is not the only telecommunications firm stepping into the hosting space. In April, CenturyLink bought managed hosting provider Savvis in a cash and stock merger worth approximately $2.5 billion. Earlier this year, Verizon scooped up Terremark for $1.4 billion.
About Nicole Henderson
Nicole Henderson writes full-time for the Web Host Industry Review where she covers daily news and features online, as well as in print. She has a bachelor of journalism from Ryerson University in Toronto, and has been writing for the WHIR since September 2010. You can find her on Twitter @NicoleHenderson.
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