LONDON (Thomson Financial) - Telecommunications company Paetec Holding Corp
has sealed a deal to purchase telecom provider McLeod USA for 492 mln usd,
according to report in the Wall Street Journal.
The paper said that under the terms of the deal, Paetec will swap 1.3 of its
shares for each McLeod share, which is privately held after a crippling debt
load sent it through a series of bankruptcy proceedings.
Paetec will be issuing 40 mln shares to pay for the transaction, while also
taking on 65 mln usd of McLeod's net debt, according to the report.
The combination of the two companies will create one of the largest rivals
to AT&T Inc and Verizon Communications for business-telephony services. For the
12 months ended June 30, Paetec and McLeod reported combined revenue of 1.6 bln
usd. The deal should eventually create annual cost savings of 30 mln usd, the
companies said.
The paper said that after the deal is completed, Paetec is expected to have
3.4 mln access lines. It will also have 17,000 miles of fibre-optic routes, used
to connect cities including Dallas, Houston and Seattle.
tf.TFN-Europe_newsdesk@thomson.com
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