By Lisa Kerner
Charlotte, N.C., May 11 - Windstream Corp. agreed to acquire D&E Communications, Inc. in a cash-and-stock transaction valued at approximately $330 million, or about $10.88 per share, the companies announced on Monday.
D&E Communications said its shareholders will receive 0.65 shares of Windstream stock and $5 in cash per D&E share under the terms of the companies' definitive merger agreement.
According to Windstream, it will issue approximately 9.5 million shares of stock valued at $86 million, based on the company's closing stock price on May 8, and pay approximately $73 million in cash as part of the transaction.
Windstream, which will also assume estimated net debt of approximately $171 million, said it plans to fund the acquisition using cash on hand and its revolving credit agreement.
The merger is expected to close in the second half of 2009, subject to some conditions including approval by shareholders of D&E Communications.
Windstream believes the transaction will be accretive to free cash flow after expected annual synergies of approximately $25 million in operating expenses and capital expenditure savings.
"D&E Communications is an exceptional, well-run company with a quality network that is 100% broadband capable," Windstream president and chief executive officer Jeff Gardner said in a news release.
"These properties significantly expand our operations in Pennsylvania and provide the opportunity to grow cash flow, reduce our dividend payout ratio and create value for shareholders and customers," Gardner said.
Stephens Inc. and Goldman, Sachs & Co. advised Windstream.
D&E Communications, an Ephrata, Pa., integrated communications provider, was advised by Credit Suisse Securities (USA) LLC.
Windstream is a Little Rock, Ark., broadband and entertainment services company.
| Acquirer: | Windstream Corp.
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| Target: | D&E Communications, Inc.
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| Announcement date: | May 11
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| Transaction total: | $330 million
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| Price per share: | 0.65 Windstream shares and $5.00 cash
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| Expected closing: | Second half of 2009
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| Stock price of acquirer: | NYSE: WIN: $9.05 on May 8
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| Stock price of target: | Nasdaq: DECC: $6.75 on May 8
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