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More CSP M&A: Windstream to Buy EarthLink for $1.1B

By Paula Bernier

So many service provider merger and acquisition announcements in so little time! The latest on the list are Windstream and EarthLink, which yesterday announced plans to merge in a $1.1 billion deal.

The goal in this case is to create a service provider with a broader national reach, a more expansive product portfolio, and better economies of scale.

The newly enlarged company, to retain the Windstream name, will operate a 145,000-fiber-route-mile network. It will offer Internet, network connectivity, managed services, SD-WAN, voice, and other services. And it expects to realize more than $125 million in annual operating and capital expense savings within 36 months of the close of the deal and says the merger creates net present value of about $900 million from synergies and tax benefits.

“The combination with EarthLink further advances Windstream’s strategy by creating a stronger, more competitive business to serve our customers while increasing free cash flow and reducing leverage,” said Windstream President and CEO Tony Thomas, who will remain in this role following the close of the deal. “With this transaction, we are combining two highly complementary organizations with closely aligned operating strategies and business unit structures.”

Following the close of the deal, which is expected in the first half of 2017,

key EarthLink management members are expected to join the combined company, and three of EarthLink’s existing directors will join the current Windstream board of directors.

News of this planned combination follows recent announcements that AT&T aims to buy Time Warner; Berkshire Partners LLC is taking a majority interest in Masergy Communications Inc.; BroadSoft has purchased VoIP Logic; CenturyLink is buying Level 3; Crown Castle bought FPL FiberNet; and private equity firm GTCR has snapped up Inteliquent, which it plans to combine with Onvoy.




Edited by Alicia Young

Executive Editor, TMC

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