EarthLink Inc., a leading Internet service provider, and ITC^DeltaCom Inc., a leading provider of integrated communications services to customers in the southeastern United States, have inked a merger agreement in which EarthLink will acquire Deltacom for $3 per share in cash, for an aggregate value of approximately $516 million, including assumption of $325 million in debt.
The deal will equip EarthLink with the resources to create a leading IP infrastructure and solutions company by integrating its existing ISP and IP-focused businesses with Deltacom’s communications business.
“As the demand for high-quality IP infrastructure continues to rapidly grow, we see a significant opportunity to focus these combined IP networking and managed service capabilities with our strong balance sheet to meet this increasing demand from enterprise level customers, wireless carriers, and multi-location national accounts while creating long-term value for our shareholders,” said EarthLink chairman and CEO Rolla P. Huff stated in the press release.
Deltacom’s 16,400-mile fiber optic infrastructure includes a 14-state Synchronous Optical Network. The company currently serves more than 32,000 small and mid-size businesses, multi-location enterprises, government agencies and wholesale customers in the southeast.
Per the merger, the companies will collaboratively offer a comprehensive suite of Internet, telecommunications and managed services. Huff said the acquisition will allow EarthLink to generate significant cash while retaining financial leeway to invest in additional endeavors.
“The capabilities we acquire with this acquisition will be complemented by our existing New Edge Networks business as we combine our nationwide MPLS network capabilities with Deltacom’s state-of-the-art infrastructure. The combined company will be especially well positioned to serve Fortune 1000 companies across the country, one-quarter of which are headquartered in Deltacom’s footprint. In addition, the Deltacom assets will enable us to further reduce our consumer ISP cost structure, which we believe will result in additional incremental cash flow from that business in years to come,” Huff stated.
The merger is expected to close in the fourth quarter of 2010 or the first quarter of 2011.
For more information visit www.deltacom.com or www.earthlink.net
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