Windstream's Paetec Acquisition Clears Final Hurdle


The Federal Communications Commission (FCC) Tuesday approved Windstream's proposed acquisition of Paetec, paving the way for one of the year's more notable service provider mergers to be completed in about a week's time.

Windstream said it expects to complete the transaction by Dec. 1.

"This merger creates a $6 billion company with nationwide reach and continues Windstream's transformation to a next-generation communications and technology provider with a full suite of enterprise-focused solutions," said Jeff Gardner, Windstream's president and CEO, in a statement.

Windstream on Aug. 1 announced a deal to acquire Paetec valued at about $2.3 billion, including $891 million in stock plus $1.4 billion in Paetec debt that Windstream would either assume or refinance.

Company shareholders approved the deal on Oct. 27, and the New York State Public Service Commission gave its blessing earlier this month.

Windstream sought to calm objections from the City of Rochester, New York, and U.S. Senator Charles Schumer by announcing it would sign a 15-year lease on a Rochester-based office and bring 335 jobs to the city, plus donate $100,000 to a Rochester community center. Windstream also plans to maintain Paetec's current headquarters in Fairport, N.Y.

With the acquisition all but completed, attention will shift toward integrating two sizable service providers with substantial regional and national footprints -- and substantial channel partner communities. Paetec brings to Windstream about 100,000 fiber route miles across the country, with cloud, data and telephony services and customers in 46 U.S. states.

Paetec Chairman and CEO Arunas Chesonis is expected to exit Paetec following the merger's completion, but told CRN this summer that Paetec channel partners are in good hands, with executives well familiar with both channels. As Chesonis noted, John Leach, senior vice president of business sales at Windstream, is a former Paetec channel chief, having left Paetec for Windstream in 2009.

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

Windstream's acquisition of Paetec is one of the more visible examples of ongoing M&A activity in the telecom and business connectivity space, and Windstream has been particularly active on that front, having bought five other service providers in the last two years alone.