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"And the day came when the risk to remain tight in a bud was more painful than the risk it took to blossom."

-Anais Nin

November 07,2016

Windstream, EarthLink to Merge

Financial Information
  • Enterprise Value                            $1.0 billion
  • EV/LTM Revenue                          0.99x
  • EV/LTM EBITDA                           4.67x
Transaction Facts
  • Windstream Holdings, Inc. (Nasdaq: WIN) announced today a definitive merger agreement with EarthLink Holdings Corp. (Nasdaq: ELNK). Following the transaction, Windstream shareholders will hold approximately 51% of the combined company, while EarthLink Shareholders will own the remaining 49% stake.
  • Windstream CEO Tony Thomas will remain as president and CEO of the combined company, with Windstream CFO Bob Gunderman joining as CFO. “Key EarthLink management” are expected to join the combined company.
  • News that the two companies were in discussions regarding a potential merger first came out last week.
Latest Big Merger in Telecommunications Space
  • Joining CenturyLink and Level 3: Last week saw the acquisition of Level 3 by CenturyLink, a much larger but ultimately similar transaction involving telecommunications giants. The rationale for this transaction is familiar – together, the companies will be more competitive and better-positioned for success.
  • Size Matters: This transaction creates an entity with 145,000 route miles of fiber nationwide, with strategic Southeast and Northeast routes. Beyond physical capacity, it also creates a portfolio of complementary solutions and an expanded customer base to which it can offer them.
  • Uniting in the Face of Pressure: Both EarthLink and Windstream also announced today their  fiscal results for the third quarter of 2016. Windstream revenue declined approximately 10% year over year to $1.36 billion, while EathLink revenue dropped approximately 13% year over year to $235 million. On closing the acquisition, the new company is expected to relieve some of that pressure, achieving $125 million in cost synergies within three years.
For more information about this transaction, click here to read the press release.
martinwolf was not the advisor in this transaction.
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