Number of Big Deals Grows in 2010

by Jan Cottingham  on Monday, Jan. 24, 2011 12:00 am  

Windstream's Future
Jeff Gardner, president and CEO of Windstream, signaled in an interview with Arkansas Business last week that the telecommunications company might be focusing more in the future on expanding and integrating its existing businesses.

"We're always in the market, obviously," Gardner said of potential purchases. But the acquisition of Hosted Solutions has given Windstream an opportunity to grow its existing assets, he said. Hosted is "a big player in cloud computing and managed services, so we've got plenty to do next year in terms of integrating that and improving the existing Windstream data centers."

Windstream's acquisition of Q-Comm included its wholly owned subsidiaries Kentucky Data Link Inc., a fiber services provider in 22 states, and Norlight Inc., a local exchange services company primarily serving the Midwest. Both KDL and Norlight are based in Evansville, Ind.

"Fiber is a huge part of our business, and KDL was an extremely unique asset in that there's a footprint there that really overlaps nicely with Windstream's footprint," Gardner said. "Whether we'll buy another fiber company is hard to say for sure, but we're definitely committed to investing in KDL. ... There's a lot of opportunity there to grow that business organically, and I'm not certain whether we'll see other nice opportunities. I think KDL represented a really unique asset for us."

The Global Picture
On Jan. 10, Thomson Reuters released its global review of mergers and acquisitions activity for 2010.

The value of M&A activity worldwide totaled $2.4 trillion last year, a 22.9 percent increase over 2009 and the strongest full-year performance since 2008. Emerging markets accounted for 33 percent - $806.3 billion - of the activity, a 76.2 percent jump compared with 2009, Thomson Reuters said.

"2010 marked the return of measured confidence for the investment banking industry," said Neil Masterson, global head of investment banking at Thomson Reuters. "While we are clearly still in a post-credit crunch environment, M&A and private equity firms are returning to robust deal activity and investment banking fees are on the rise."

Masterson said that "with corporations holding record amounts of cash, attractive financing opportunities, and a growing IPO pipeline, many of the factors are in place for continued momentum in 2011."

McKissack, of Stephens Inc., said, "We see continued improvement in 2011 versus 2010. A lot of the things that were driving the market in 2010 are still there in 2011.

"The strategic acquirers and financial sponsors have a lot of capital to put to work. There are record amounts of cash stored up that need to be deployed at rates of return. The financing markets are likely to remain active in 2011. That's a fantastic backdrop for M&A."



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