Paetec will acquire regional rival Cavalier Telephone Corp. in a $460 million all-cash deal, continuing a wave of recent mergers and acquisitions sweeping the telecom service provider space.
The acquisition will significantly expand Paetec's fiber-optic network business, adding Cavalier's 17,000 miles of fiber network in the U.S. and thus upping its own fiber network to more than 37,000 miles.
The merger agreement has been approved by both companies' boards of directors, and Cavalier will become an indirect, wholly owned subsidiary of Paetec Holding Corp. The companies said in a statement they expect the acquisition to be completed within six months.
Paetec has made several moves lately as part of an aggressive expansion, including the recent opening of a flagship data center in Andover, Mass.
"This planned acquisition of Cavalier fits our strategic plan to add both fiber assets and regional density to better serve our customers and realize increased network synergies, both in the local loop and the long haul," said Arunas A. Chesonic, Paetec's chairman and CEO, in a statement. "Cavalier's fiber infrastructure, network assets and corporate culture make it a perfect match for Paetec and dramatically strengthen the company in the Eastern United States."
According to Fairport, N.Y.-based Paetec, the combined companies give Paetec a local presence in 86 of the top 100 metropolitan statistical areas, and a 95 percent increase in co-locations. Both Paetec and Cavalier were on CRN's recent list of 75 Coolest Telecom Service Providers, and both have robust service provider channel programs.
"This is a major milestone in the Cavalier story," said Danny Bottoms, Cavalier president and CEO, in a statement. "Our future has never looked brighter."
Consolidation has become the new normal in the telecom service provider space, with Paetec-Cavalier only the latest in a series of 2010 moves. Back in April, Qwest Communications announced its blockbuster, $10.6 acquisition by CenturyLink, expected to be completed in the first half of 2011. Last month, Airband and Sparkplug Communications merged, and earlier this month, MegaPath confirmed the closing of its merger with Covad and Speakeasy.