Consolidated Communications to buy FairPoint Communications Inc in deal valued at $1.5 billion

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Consolidated Communications Holdings Inc said on Monday it would buy broadband service provider FairPoint Communications Inc in an all-stock deal valued at $1.5 billion, including debt.

Consolidated’s acquisition of FairPoint marks the fifth such deal in the last two months as growing demand for data and video services drives companies to expand their fiber optic networks in newer regions, reports Reuters.

The deal will help Consolidated expand into northern New England, adding about 17,000 fiber route miles in the region. Shareholders of FairPoint will receive 0.73 shares of Consolidated for each share held.

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Excluding debt, the equity portion of the deal is valued at about $561 million, or $20.72 per FairPoint share. This represents a premium of 21.9 percent to FairPoint’s Friday close.

FairPoint’s shares were up 14.41 percent at $19.45 in premarket trading. Consolidated will assume FairPoint’s long-term debt of about $900 million as of Sept. 30 and own about 71.3 percent of the combined company on a pro forma basis.

FairPoint and Consolidated together generated pro forma annual revenue of more than $1.5 billion as of Sept. 30. The transaction, which is expected to close by mid-2017, is expected to add “meaningfully” to Consolidated’s cash flow per share in the first year following the completion of the deal.

Among the latest deals in the sector, CenturyLink Inc agreed to buy Level 3 Communications Inc in a $24 billion deal in October.

Telecom infrastructure provider Zayo Group Holdings Inc agreed to buy Electric Lightwave for $1.42 billion in cash in November.

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