Consolidated Communications to buy FairPoint Communications for $1.5 bn

US telecommunications company Consolidated Communications Holdings Inc yesterday struck a deal to buy broadband service provider FairPoint Communications Inc for $1.5 billion in stock, including debt.

Under the terms of the deal that has been approved by the boards of both companies, Consolidated will pay a fixed exchange ratio of 0.7300 shares of its share stock for each share of FairPoint or $20.72 per FairPoint share, a premium of 21.9 per cent to FairPoint's Friday close.

Post closing, FairPoint shareholders will own 28.7 per cent of the company, while Consolidated shareholders will own 71.3 per cent.

The proposed acquisition is expected to generate annual operating synergies of approximately $55 million, which are expected to be achieved within two years after completion of the merger.

Bob Udell, president and CEO of Consolidated, will serve as the president and CEO of the combined company and one member of the FairPoint board will join the Consolidated board of directors.

FairPoint, based in Charlotte, North Carolina, has operations in 17 states with the largest network in northern New England. It operates a fiber network of approximately 21,000 fiber route miles. \

It has 1.6 million phone customers and 230,000 Internet customers. Most of the company's customers and workforce are in Maine, New Hampshire and Vermont.

The Nasdaq-listed company has annual revenues of $830 million, market cap of $446 million, debt of $887 million, and employs around 2,600 people.

''This transaction combines two companies with extensive fiber networks and complementary strategies focusing on being the leading business and broadband solutions provider,'' said Bob Udell.

''This merger positions Consolidated to leverage its extensive product and services portfolio and consultative sales approach across 24 states bringing advanced solutions and a better experience to customers,'' he added.

Illinois-based Consolidated is a leading broadband and business communications provider throughout its 11-state service area.

It offers advanced fibre optic network and multiple data centers and a wide range of communications solutions, including data, voice, video, managed services, cloud computing and wireless backhaul.