Telecommunications company Windstream Corp. (WIN) said it has
reached an agreement to acquire Iowa Telecommunications Services
Inc. (IWA) in a cash-and-stock deal valued at about $530
million.
The planned purchase is the latest in a series of deals for
Windstream, which has been picking up other rural
telecommunications providers to build up its own bulk as the sector
continues to consolidate.
According to the agreement, Iowa Telecom shareholders will
receive 0.804 share of Windstream and $7.90 cash for each share of
Iowa Telecom. Windstream plans to issue about 26.5 million shares
of its stock valued at about $269 million, based on Monday's
closing price, and pay $261 million in cash.
The deal values each Iowa Telecom share at $16.04, 26% more than
their closing price Monday.
Windstream also will repay debt of about $598 million.
"These are well-run, profitable properties in very rural service
areas that expand our presence in the Upper Midwest and grow our
free cash flow per share," said Windstream President and Chief
Executive Jeff Gardner.
Windstream expects some $35 million in annual cost savings from
the deal.
Iowa Telecom, which employs about 800, serves customers in Iowa
and Minnesota and has about 256,000 access lines. Windstream serves
customers in 16 states and has more than 3 million access
lines.
Windstream shares fell 7 cents in early trading to $10.06 while
Iowa Telecom jumped 24% to $15.76. Both stocks are up nearly 10%
this year.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855;
nathan.becker@dowjones.com;