Yesterday PAETEC (news, filings) voted as scheduled on the proposed merger with Windstream (NYSE:WIN, news, filings). Despite the expectation by some that another bidder emerge and upset the apple cart, the result was a straightforward approval of the deal by 99% of shares voting, representing 81% of the total outstanding.
The idea that Level 3 was going to make a higher rival bid was always more of a theoretical exercise than an actual rumor. On paper you could make a compelling case, which is what FBR did. But in practice, I never saw it as move that Level 3 might reasonably make. Actually, Windstream’s timing for this move was quite fortuitous, as I think they would have faced a more crowded process if they had initiated it six months in either direction.
The deal isn’t done yet of course, the two expect to complete it by the end of the year. Honestly, I think it will probably be done by the end of November, but you never can tell with regulators I guess. Not that there’s any chance regulators will torpedo the deal. After all, when complete we will have a major ILEC competing as a CLEC outside its own footprint against the other ILECs in nearly all major markets nationally – thirty years after Ma Bell was partitioned on geographic lines that nobody ever seemed to cross properly.
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Categories: CLEC · ILECs, PTTs · Mergers and Acquisitions
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Layoffs in 4… 3… 2..
More and more M&A in the business voip provider will become inevitable.
All those fat cats at Paetec are going to get blown out of the water. It’s a shame because Paetec used to be good….now they will be a distant memory!!!!!
There was no chance ever that an 11th hour bid would occur unless the C level’s @ Paetec were paid in full upfront. Just look at the Windstream deal when done. Guarantee 99% who don’t stay will be paid and leave.
http://www.channelpartnersonline.com/news/2011/10/paetec-many-employees-anxiously-awaiting-job-cuts.aspx
The merger between Windstream Corp. and PAETEC Holding Corp. will create a company with a combined workforce of roughly 15,000 employees.
But that number is likely to shrink as Windstream integrates PAETEC into its operations.
“It’s an anxious time” for many employees at PAETEC, PAETEC Chief Executive Arunis Chesonis told about 150 people at Roberts Wesleyan College’s Leadership Breakfast, the Rochester, N.Y.-based Democrat and Chronicle reported. “It’s especially anxious in middle management.”
Last week, stockholders of PAETEC approved the proposed merger with Windstream, moving closer to finalizing the deal by the end of the year. The Federal Communications Commission and some state regulatory agencies must still approve the deal.
As of June 30, 2011, PAETEC had 4,900 full-time employees, none of whom was covered by a collective bargaining agreement, according to a regulatory filing. Windstream had about 10,000 employees at the time it announced an agreement over the summer to acquire PAETEC by issuing roughly 73 million shares of stock valued at $891 million and assuming or refinancing $1.4 billion in debt.
The deal will create a company with combined 2010 revenues of $5.3 billion, but not all employees will benefit from the merger. One group of employees – back-office administrative workers in such functions as marketing and finance – will certainly fall victim to job cuts as Windstream consolidates those functions within its own, the Democrat and Chronicle cited Chesonis.
“A lot of those departments lose a lot of people in something like this,” he said. “We know because we’ve bought 14 companies over the years.”
Asked about planned job cuts, Windstream spokesman David Avery told Channel Partners, “We are still finalizing staffing levels for the combined company as part of the integration planning process.”
Little Rock, Ark.-based Windstream expects its acquisition of Fairport, N.Y.-based PAETEC to yield roughly $100 million in annual pre-tax operating cost synergies and tax benefits, and the company anticipates incurring roughly $50 million in merger and integration costs in the first year following closing of the merger.