Windstream to Buy CT Communications for $585 Million

Windstream Corp., the wireline spinoff of Alltel Corp. of Little Rock, announced Tuesday that it has entered into a definitive agreement to acquire all the outstanding shares of CT Communications Inc. of Concord, N.C., for about $585 million.
Little Rock-based Windstream will pay $31.50 a share in cash for the company — a 31 percent premium to CT Communications' previous 30-day trading average.
The deal, Windstream's first acquisition after its merger with Valor Communications, is set to close in the second half of 2007, subject to certain conditions, including federal and state regulatory approval and approval from CT Communications shareholders.
In an interview with Arkansas Business last Monday, Gardner said Windstream will look to acquire more rural assets in the next five years.
(Read full story here and listen to the full interview or read excerpts here).
Windstream said the deal adds "attractive markets in North Carolina, which are adjacent to existing operations." (See map below.) Windstream said CT Communications has broadband availability to 95 percent of its incumbent local exchange carrier lines, "75 percent of which can offer up to 10Mb speeds."
Windstream said it expects to realize free cash flow improvements through annual cost synergies of about $30 million, as well as reductions in capital expenditures, once the deal is done and operations are fully integrated.
"CT Communications' management and employees have built an exceptional business and are highly respected in their local communities," Jeff Gardner, president and CEO of Windstream, said in a news release. "CT Communications fits strategically with Windstream and advances our strategy of continuing to grow through acquisitions while expanding our free cash flow."
CT Communications generated $179.2 million of revenue -- $57 million of operating income before depreciation and amortization -- and $25.3 million of operating income in the 12 months ended March 31, Windstream said.
Shares of CT Communications (Nasdaq: %%CTCI%%) closed at $21.58 last week. Shares of Windstream (NYSE: WIN) closed at $14.92.
For more on Windstream, see this week's Arkansas Business cover story here.


A Windstream coverage map showing the two telecoms' territories.