Earthlink (ELNK) this morning said it agreed to acquire ITC Deltacom (ITCD.OB), a provider of integrated communications services in the southeastern U.S., for $3 a share, or $516 million including the assumption of $325 million in debt. The company notes that it is paying about 4.7x adjusted EBITDA for the June 12 months ended June 30, including expected synergies but excluding one-time transaction costs.
ITC Deltacom has about 16,400 miles of fiber optic cable, and serves over 32,000 small and mid-sized businesses, the company said,
With the deal, the company will grow from about 575 employees to just under 2,000. Earthlink will remain headquartered in Atlanta under teh current management team.
Earthlink also said it now sees 2010 adjusted EBITDA of $207 million to $211 million, with free cash flow of $193 million to $201 million, and net income of $94 million to $97 million. Previous guidance was for $205 million to $211 million in EBITDA and $91 million to $97 million in net income.
The company said on a pro forma basis adjusting for the deal, the combined companies for the 12 months ended June 30 would have had $1.1 billion in revenue. Earthlink said it expects annual cost synergies of about $20 million to be fully realized by the end of the second year after closing.� The company expects positive incremental operating cash flow within 12 months of closing.
Earthlink notes that ITC Deltacom has $325 million of 10.5% senior secured notes due 2016 outstanding; the merger triggers a requirement that the company offers to buy them back at 101% of par. Notes not repurchased will remain outstanding.
This morning:
- ELNK is down 14 cents, or 1.5%, to $8.95.
- ITC Deltacom yesterday closed at $1.45.
No comments:
Post a Comment