Windstream Acquires Hosted Solutions for $310M

(Ping! Zine) – Windstream announced today that it has entered into a definitive agreement with ABRY Partners to acquire Hosted Solutions Acquisition, LLC (Hosted Solutions) in an all-cash transaction valued at $310 million.
 
Hosted Solutions, based in Raleigh, N.C., is a leading regional data center and managed hosting provider focused on enterprise-class Infrastructure as a Service (IaaS) solutions (managed hosting, managed services, colocation, cloud computing and bandwidth) for small and medium-sized business customers as well as large enterprises. The company serves more than 600 customers and has approximately 125 employees.

The acquisition of Hosted Solutions will transform Windstream’s data center business, increasing the scale and scope by adding five state-of-the-art SAS 70 Type II certified data centers in Raleigh, N.C.; Charlotte, N.C., and Boston with a total of 68,000 square feet of data center capacity. As a result, Windstream will have a combined total of 12 data centers across the country.

“Data center space is increasingly in demand among our existing business customers,” said Jeff Gardner, president and chief executive officer of Windstream. “Hosted Solutions is an excellent complement to our existing enterprise service portfolio. For the past decade, they have been delivering highly complex managed hosting solutions to customers of various sizes. In addition, they have a proven track record of growing revenue and generating significant free cash flow.”

Windstream expects to finance the transaction with existing liquidity through cash reserves and revolving credit capacity.

Windstream will be able to fully amortize the purchase price goodwill over 15 years, resulting in expected tax benefits with an estimated net present value of $52 million.

Windstream estimates the transaction will be accretive to free cash flow in the first year following the closing after expected annual synergies of approximately $1.5 million in operating expense savings and excluding integration charges.

The boards of both companies have approved the transaction, which is expected to close in the fourth quarter of 2010, subject to certain conditions, including necessary regulatory approvals.

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