Windstream, Earthlink to Merge

November 15, 2016

Financial Information

 

Enterprise Value: $1.0 billion
EV/LTM Revenue: 0.99x
EV/LTM EBITDA : 4.67x

 

Transaction Facts

 

Windstream Holdings, Inc. (Nasdaq: WIN) announced today a definitive merger agreement with EarthLink Holdings Corp. (Nasdaq: ELNK). Following the transaction, Windstream shareholders will hold approximately 51 percent of the combined company, while EarthLink Shareholders will own the remaining 49 percent stake.

Windstream CEO Tony Thomas will remain as president and CEO of the combined company, with Windstream CFO Bob Gunderman joining as CFO. “Key EarthLink management” are expected to join the combined company.

News that the two companies were in discussions regarding a potential merger first came out last week.

 

Latest Big Merger in Telecommunications Space

 

Joining CenturyLink and Level 3: Last week saw the acquisition of Level 3 by CenturyLink, a much larger but ultimately similar transaction involving telecommunications giants. The rationale for this transaction is familiar — together, the companies will be more competitive and better-positioned for success.

 

Size Matters: This transaction creates an entity with 145,000 route miles of fiber nationwide, with strategic Southeast and Northeast routes. Beyond physical capacity, it also creates a portfolio of complementary solutions and an expanded customer base to which it can offer them.

 

Uniting in the Face of Pressure: Both EarthLink and Windstream also announced today their  fiscal results for the third quarter of 2016. Windstream revenue declined approximately 10% year over year to $1.36 billion, while EathLink revenue dropped approximately 13% year over year to $235 million. On closing the acquisition, the new company is expected to relieve some of that pressure, achieving $125 million in cost synergies within three years.

 

Tim Mueller was not the adviser in this transaction.

 

View this article and others like it on Smart Business Magazine's website

 

 

 

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