* More telecom industry consolidation
Telecom industry consolidation continues, as two CLECs this week announced that they’re combining operations in a $1.3 billion deal.
US LEC and PAETEC have signed a definitive agreement to merge the two companies. Both offer services to enterprises in the Eastern U.S.
Under the terms of the agreement, PAETEC and US LEC will become wholly-owned subsidiaries of a new publicly owned holding company, which they referred to as “New PAETEC.” US LEC security holders will own approximately 1/3 and PAETEC security holders will own approximately 2/3 of the new holding company.
Upon closing, US LEC shareholders will be entitled to receive one share in the new holding company in exchange for each share of US LEC that they currently own, and PAETEC shareholders will be entitled to receive 1.623 shares in exchange for each share of PAETEC that they currently own. Based on US LEC’s closing stock price on August 11, the value of the new company will be approximately $1.3 billion.
Upon completion of the transaction, New PAETEC expects to be listed on the Nasdaq Stock Market under the ticker “CLEC.”
The PAETEC/US LEC union follows the recent merger of Choice One, CTC Communications and Conversant Communications into a single service provider called One Communications. One Communications, which company officials claim is the second largest CLEC behind XO Communications, is attempting to achieve economies of scale in light of the megamergers between SBC and AT&T, and Verizon and MCI.
