Windstream's PAETEC Buy Clears State Hurdle With Promise To Bring Jobs To Rochester


Windstream cleared another hurdle in its pending acquisition of PAETEC this week, when the New York State Public Service Commission, which since August has been considering the deal’s impact to jobs and the local economy, approved the merger yesterday.

Pending final regulatory approval, Windstream hopes to wrap up the acquisition by the end of the year.

Both the city of Rochester and U.S. Senator Charles Schumer had filed objections with the commission as well as the Federal Communications Commissions because Windstream had yet to clarify whether it would follow through on PAETEC’s plan to maintain a significant workforce in the Rochester area. But those objections were withdrawn earlier this week when Windstream announced that it would sign a 15-year lease on 67,000 square feet of office space in the former Seneca building in Rochester, bringing up to 335 jobs to the city.

That’s significantly less than the one thousand jobs that PAETEC had promised with the world headquarters it had planned for the Midtown Project Site prior to its sale, but Windstream sweetened the deal with a $100,000 donation toward renovations and installation of a computer lab at a Rochester community center. And Windstream will also hang on to PAETEC’s current headquarters, in Perinton, N.Y.

“As we have said consistently since the PAETEC acquisition was announced in August, Windstream intends to maintain a significant presence in the Rochester area for a long time,” Jeff Gardner, Windstream president and CEO said in a statement. “We have been engaged in a time-consuming and detailed analysis of our facility needs in Rochester, and I am pleased that we can be part of revitalizing the city’s core. We look forward to obtaining the necessary regulatory approvals and closing the transaction before the end of the year.”

The merger between Windstream and PAETEC has been touted by industry insiders as a strategic match that would build out the service provider’s national footprint and expand its product portfolio. But it hasn’t been all smooth sailing since the deal was unveiled.

The acquisition has triggered anxiety over inevitable job cuts in the struggling Rochester area. And shareholder scrutiny into the merger spurred lawsuits from two separate firms, which claimed that PAETEC’s board did not obtain maximum value for its shareholders. Those suits were settled in mid-October in an undisclosed agreement.

Windstream announced in August that it would acquire PAETEC in a deal valued at about $891 million in stock, plus $1.4 billion in PAETEC debt that Windstream will assume or refinance, for a total of $2.3 billion. Shareholders voted overwhelmingly to approve the merger on October 27th.