Consolidated Communications To Buy FairPoint Communications In $1.5 Bln Deal

(RTTNews) - Consolidated Communications Holdings Inc. (CNSL) announced it agreed to acquire FairPoint Communications Inc. (FRP), a business and broadband communications provider, in an all-stock merger transaction valued at approximately $1.5 billion, including debt. The agreement and the proposed merger have been unanimously approved by the boards of directors at both companies.

As per the terms of the agreement, FairPoint shareholders will receive a fixed exchange ratio of 0.7300 shares of Consolidated Communications common stock for each share of FairPoint common stock. This equates to a premium of 17.3 percent to the 30-day average exchange ratio as of December 2, 2016. After closing, Consolidated's shareholders will own approximately 71.3 percent of the pro forma combined company and FairPoint's shareholders will own 28.7 percent.

"This transaction combines two companies with extensive fiber networks and complementary strategies focusing on being the leading business and broadband solutions provider," said Bob Udell, president and chief executive officer of Consolidated Communications.

On a pro forma basis, the combined company generated more than $1.5 billion in revenue and $566 million in adjusted EBITDA before synergies or $621 million after synergies for the 12 months ending September 30, 2016. The combined markets are expected to strengthen Consolidated's growth opportunities, enhancing its scale with a fiber-rich network that will extend across 24 states. Together, Consolidated Communications and FairPoint will expand upon the strong reputations each has built with its customers and in the communities they serve.

The transaction is expected to generate annual operating synergies of approximately $55 million, which are expected to be achieved within two years after completion of the merger.

After the transaction closes, Bob Udell will continue to serve as president and chief executive officer of the combined company and one director from the FairPoint Board will join the Consolidated Communications Board of Directors. The combined company will retain the Consolidated Communications name and will be headquartered in Mattoon, Ill.

Consolidated Communications' Board of Directors has declared a quarterly dividend of $0.38738 per share consistently for 46 quarters since its initial public offering in 2005. The Consolidated Communications Board of Directors expects to maintain its annual dividend of $1.55 per share after the transaction closes.

The transaction is subject to standard closing conditions including federal and state regulatory approvals and the approval of both Consolidated Communications' and FairPoint's shareholders. The merger is expected to close by mid-2017.