As several readers have commented, the S-4 filing for Windstream (NYSE:WIN, news, filings) purchase of PAETEC (news, filings) is out, and it makes for some interesting reading. There was indeed another suitor, one whose offer started at $6 per share and rose as high as $6.80. But they came later to the process and without funding already in hand to refinance PAETEC’s debt load, and in the end were unable to derail Windstream’s bid – which was also raised although obviously it didn’t reach the same heights.
Based on the data in the filing, it does seem certain that ‘Company A’ was Earthlink (NASDAQ:ELNK, news, filings). That would have been a blockbuster deal, but not all that surprising. The two large CLECs that Earthlink bought in the last year (Deltacom, One Communications) were also frequently noted as potential PAETEC targets, and it is common knowledge that Earthlink is still on the prowl. They were ready to pay well, as a price of $6.80 per share would have been a multiple more in the range I might have expected.
There was another potential suitor cited in the filing, ‘Company B’, which was not in a position to make an immediate bid. I can’t think who that would be other than Level 3, which is still busy closing the Global Crossing deal and would have wanted to wait a quarter or two. I rather doubt they would have actually done the deal even then though.
Given that Earthlink is obviously still hungry and willing to make a deal as large as PAETEC would have been, I think we will see them show up again bidding for one of the other substantial CLEC assets out there: Broadview, Integra, TelePacific, etc.
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