Paetec CEO To Exit Following Windstream Acquisition


Arunas Chesonis, chairman and CEO of Paetec, will exit the company following its planned acquisition by Windstream which, if all goes according to plan, will mean a dramatically expanded service provider led by Jeff Gardner, current Windstream president and CEO.

It makes the most sense to leave one person clearly in charge, especially with two public companies in the same industry segments joining forces, Chesonis said.

"You always want to provide a clean slate for the company buying you," he told CRN this week. "People are always going to look to me for some ideas, but you really only need one sheriff in town. It makes it much easier for Jeff to integrate the teams."

Windstream's acquisition of Paetec, worth about $2.3 billion with an $891 million stock sale and $1.4 billion debt assumption taken into account, will give Windstream about 100,000 fiber route miles across the country and an expanded cloud, data and telephony services footprint with customers in 46 U.S. states.

The deal, which was announced Monday, also means the merging of two significant service provider channels and a less certain future for Paetec's nearly 5,000 employees. Chesonis said it's too early to tell how many Paetec team members will join Windstream, but he's confident both Paetec employees and Paetec channel partners will be well taken care of.

"There's a lot of good people in both companies," Chesonis said. "Anyone able to help drive top-line sales should have a place."

From a channel perspective, Chesonis pointed out that John Leach, senior vice president of business sales at Windstream, is a former Paetec channel chief, having left Paetec for Windstream in September 2009.

"This is two channel-friendly companies coming together to find more resources for the channel," Chesonis said. "It bodes well for everyone."

Windstream and Paetec have both been active participants in the ongoing wave of mergers and acquisitions sweeping the telecom service provider channel. Paetec, Fairport, N.Y., acquired Avaya-centric VARs Quagga and Xeta Technologies in the past year and in 2010 bought Cavalier Telephone Corp. for $460 million.

Little Rock, Ark.-based Windstream has been especially acquisitive as well. It bought Iowa Telecom in 2009, NuVox in February 2010, Q-Comm in August 2010 and Hosted Solutions in November 2010.

The acquisition bid from Windstream to Paetec was unsolicited, Chesonis said, and more details about how it occurred will be made available in SEC filings as the acquisition closes.

But Paetec, which Chesonis founded in 1998, will be in good hands, he said.

"Jeff is a great CEO," Chesonis said. "He'll be a great steward for shareholders."

Chesonis will formally exit Paetec after the closing, expected to take place within six months. He has no plans to retire, however.

"I'm 49 years old," Chesonis said. "I've got a lot of gas left in the tank."