Published: Thu, December 08, 2016
Tech | By Dwayne Harmon

Illinois company wants to buy FairPoint for $1.5B

Illinois company wants to buy FairPoint for $1.5B

Under the deal, Charlotte, N.C. -based FairPoint shareholders will receive 0.73 Consolidated shares for each FairPoint share they own.

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. FairPoint has invested more than $1 billion in its infrastructure and technology since 2009, according to the company, and is now able to provide greater than 90 percent broadband coverage. More than 1,700 FairPoint workers in New Hampshire, Maine and Vermont participated in a four-month strike that ended in February 2015.

FairPoint is publicly traded on NASDAQ as FRP with a market capitalization of $446 million.

Union officials said in a statement that those layoffs are still coming despite the news Monday.

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Consolidated reckons the merger will generate "annual operating synergies" of about $55 million within two years of its completion.

The FairPoint purchase would be Consolidated's largest. The transaction will leave Consolidated shareholders with 71.3% of the combined company, and Fairpoint investors with the remainder.

"We are well-positioned to ensure a smooth transition for customers and employees as we leverage a solid track record of successful integrations", said Bob Udell, Consolidated's CEO.

The dividend payout ratio will go up as a result of the "all-stock merger transfer" and improve the balance sheet through "deleveraging". Monsanto (MON) announced that ISS and Glass Lewis have both recommended shareholders vote for its merger w/ Bayer (BAYRY).

Taking a brief view of stock performance, we see that company shares are now trading $1.17 off the 50-day moving average of $25.91 and $1.45 off of the 200-day moving average of $25.63.

The two operators are roughly equal in terms of revenues, with a pro forma turnover together of United States dollars 1.5 billion in the year to September.

The deal would include assumption of FairPoint's debt, an estimated $887 million. With the deal, the combined company will carry about $2.3 billion in debt.

Both companies maintain extensive fiber networks - totaling 35,100 "route miles" - and believe the tie-up will deliver competitive and cost-related benefits.

The deal must be approved by shareholders and the Vermont Public Service Board.

Porter expects the companies to file a petition for review soon.

McLaughlin said the workforce cuts come at a time when state "regulators continue to investigate their service quality failures".

"It's clear that the ill-advised sale of Verizon to FairPoint in 2008 has had a profound negative impact on workers and consumers in Northern New England". "While we certainly welcome FairPoint's departure from Northern New England, we'll be vigilant in examining any potential new owner and fighting for fairness for our members and our communities". The Company operates local exchange companies and also offers video services to its customers by reselling DirectTV content and providing cable and IP television video over digital subscriber line (DSL). The company had revenue of $191.50 million for the quarter, compared to analysts expectations of $188.56 million. The company's climb toward operational stability has been a work in process ever since.

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