Ok, a bit of the dust has settled on yesterday’s purchase announcement of PAETEC by Windstream, so let’s check the temperature out there:
Windstream’s PAETEC Purchase: Premium Price or Bargain?
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I think it was probably a bargain but only if they get the execution right. Return good / risk high. It’s a called strike, or maybe a CTL in my mind.
i’d not be surprised if others came out of the woodwork and placed all cash offers for Paetec since there’s significant risk with all stock options and the overall debt load.
I thought about that scenario, but who out there is ready to step up with cash right now? Most of those who are large enough and might otherwise consider it are presently otherwise occupied – CenturyLink, Level 3. TW Telecom could do it in theory, however they have not shown interest in this sort of asset historically.
TWT was interested back when it was just CavTel/Intellifiber.
XO? Crazy yes. But stranger things have happened!
Haha… Yeah? Name one! 🙂
It would be nice to find out what the driver was for this deal. The employees and the City of Rochester feel like they have been hosed!!
Follow the money…that was the driver. For Chesonis and Aab to walk away with millions. Meanwhile Arunas walks away from all of those loyal, underpaid and overworked employees who will be left without a job or a golden parachute. He made himself and his senior team millions and is leaving the others hanging out to dry…
Unknown 1: Always cracks me up when folks bash owners who risked their capital and are made out as bad guys when they exit. The poor overworked underpaid employee is the victim….are you serious? How much did the employee have at risk of their own capital? $0…..it is called capitalism…..the employee accepted their checks….received their benifits…..and had none of their own $$ at risk! I am sick of this entitlement attitude….The principals had an idea….invested their own money….and have an opportunity to sell…..and by the way….provided thousands of people jobs during one of the worst economic downturns in our history……..wake up and smell the coffee….or open up your own wallet and open a business!
You are ignorant. Arunas did not front his own money, he borrowed – hundreds of millions. Yes he took risk, but he also lied to the entire company at the beginnning of June when he said the company was not for sale and there were no potential bidders. He was also selling his personal stock at the time and told the company it was to “diversify his personal protfolio”. All the empolyees at paetec worked for below market compensation and dealt with all the growing pains of the M&A with no benefit at the end. There are lawsuits being filed now; he mislead the company empolyees, investors, and the public on his intentions. Your comments sound like you must be in leadership there…
Date Insider Shares Type Transaction Value*
Jul 1, 2011 CHESONIS ARUNAS A
Officer 700,000 Direct Acquisition (Non Open Market) at $0 per share. N/A
Jul 1, 2011 MOORE ROBERT D JR
Officer 240,000 Direct Acquisition (Non Open Market) at $0 per share. N/A
Jul 1, 2011 WILSON KEITH M
Officer 800,000 Direct Acquisition (Non Open Market) at $0 per share. N/A
Jul 1, 2011 CHESONIS ALGIMANTAS K
Officer 230,000 Direct Acquisition (Non Open Market) at $0 per share. N/A
Jul 1, 2011 O’CONNELL MARY K.
Officer 240,000 Direct Acquisition (Non Open Market) at $0 per share. N/A
Jul 1, 2011 DERIGGI MARIO
Officer 240,000 Direct Acquisition (Non Open Market) at $0 per share. N/A
ENOUGH SAID!!!!!!
Arunas did well for himself and his employees for many years….that’s why this news comes as a shock to his employees. As well as the conversations he’s had with his employees over the past year and most recently the past several months. His words and his actions don’t match up. That’s the let down.
Don’t entirely disagree with you but for this one general exception. A lot of the networks who are selling out for big money were formed out of the bankruptcies of the early 2000’s. A whole bunch of people were stiffed due to the scams perpetrated at that time. May not totally be on point here with PAETEC but some of the risks were mitigated by the fact that they were able to get networks on the cheap. Timing and market factors that changed since that time virtually assured success for those. As for labor vs management arguments, I agree that is a personal choice that people make. No such things as underpaid or overpaid, you get what you get and/or are willing to accept. And you do it for your own reasons.
I feel bad for Rochester folks. But the people of Rochester are ready to hang Arunas. I’d leave town if I were him. Whether he did it in good faith I guess doesn’t matter, because the outcome is the same. I don’t get why all the acquisitions…perhaps he was setting up the company for sale by acquiring other companies as well.
Why would he start an energy division if he knew a sale was on the horizon?
He didn’t start one, he bought one – a minor difference perhaps. Regardless, I suspect this came about at Windstream’s initiative, as opposed to Chesonis aiming for a sale. We’ll see when they S4 comes out I guess.
Yes, he bought one upstate but started up NJ too.