Windstream, Uniti Announce Merger Plans

May 3rd, 2024 by · Leave a Comment

Well, they actually went and did it, and just a months after rumors of a deal started circulating in earnest. In an announcement this morning, Uniti Group says that they have entered into a definitive agreement to merge with Windstream to create a ‘premier insurgent fiber provider’.

Uniti was originally spun off from Windstream as CS&L back in 2014 before doing a bit of consolidation of its own. But the results of the transaction were successfully challenged in court, leading to a restructuring at Windstream and a follow-up settlement that reshaped the terms of the relationship between the two. Windstream remains Uniti’s largest customer though, and the two have always been tied together at the infrastructure level.

Now it’s time to put all the pieces back together, but what will the company look like? Elliot Investment Management currently owns a big piece of both companies, and will roll over those stakes into the combined company, as will some other large investors. Windstream investors will get $425M in cash and $575M of preferred equity plus some warrants. Uniti investors will hold 62% of the common equity. Both company’s existing debt structure will remain in-place, which will greatly simplify things at least initially.

The combined company will be led by Uniti CEO Kenny Gunderman, and it appears it will te the Uniti brand that is retained. Synergies of $100M in annual opex and $20-30M in annual capex are envisioned over the 3 years after closing. Net leverage will be 4.8x. None of this will happen for a little while yet of course, as given the regulatory steps and other complications the closing isn’t expected until the second half of 2025.

Operationally it will be interesting to see where the combined company puts its effort towards. In the announcement it is noteworthy that the expansion of Windstream’s FTTH business, with 1.1M customers and 1.5M homes passed, is specifically mentioned. The combined company would be looking to add another million or so to that, targeting tier 2 and 3 markets in the Midwest and Southeast.

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Categories: Fiber Networks · FTTH · Mergers and Acquisitions

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