Windstream to buy Iowa Telecom for $1.1B

Tue, 11/24/2009 - 7:35am
The Associated Press

LITTLE ROCK, Ark. (AP) – Phone company Windstream Corp. is on the prowl again for more acquisitions, this time buying Iowa Telecommunications Services Inc. for $1.1 billion in cash, stock and repayment of debt.

Iowa Telecom is Windstream's fourth phone carrier acquisition this year. The Midwestern phone company will expand Windstream's operations into Iowa and Minnesota, adding about 256,000 phone lines, 95,000 high-speed Internet customers and 26,000 video subscribers.

The deal is expected to close in mid-2010.

Iowa Telecom shareholders will get 0.804 shares of Windstream stock and $7.90 in cash for each share they own. Windstream will issue 26.5 million shares worth $269 million and pay $261 million in cash. It also plans to repay about $598 million of Iowa Telecom's debt.

The purchase includes tax assets worth $130 million and 15 Advanced Wireless Service licenses from the Federal Communications Commission, as well as three 700 MHz band licenses used for cell phones.

Standard & Poor's analyst Todd Rosenbluth said in a research note that Windstream will be buying a profitable business but paying an "expensive" price for it, excluding tax assets.

Three weeks ago, Windstream said it would buy NuVox Inc. for $643 million in cash and stock. The business phone company operates in the Southeast and Midwest, especially serving small- and medium-size businesses.

Its acquisition of rural Pennsylvania phone company D&E Communications Inc. closed earlier this month. In September, Windstream said it was buying Lexcom Inc. for $141 million, which operates in Davidson County, N.C.

Shares of Windstream, based in Little Rock, Ark., fell 13 cents to $10 in afternoon trading.

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