Windstream Holdings Inc. of Little Rock and EarthLink Holdings Corp. have been granted approval by the Federal Communications Commission to move forward with a planned $1.1 billion merger.
The companies announced the deal in November. Windstream will take control of Atlanta's EarthLink and refinance about $636 million of that company's debt as part of a $673 million all-stock transaction.
Approvals at the state and shareholder level remain before the deal is finalized, but it is still on track to be completed in the first half of this year, Windstream spokesman David Avery wrote in an email Friday. Avery said March 1 is the target date for "integration."
"We appreciate the FCC's timely review and recognition of the public interest benefits of the transaction," Avery said. "The combination of the two companies creates a stronger, more competitive company to serve business customers. It also improves the overall product portfolio available to customers, including software defined wide area networking (SD-WAN) and unified communications. From a financial perspective, it increases free cash flow and reduces leverage."
Windstream shareholders will hold about 51 percent of the company once the deal is finalized. EarthLink shareholders will own about 49 percent of the company and will receive 0.818 Windstream share for each EarthLink share owned.
No opposition to the merger was recorded during a public comment period, according to a public notice filed by the FCC, granting the transfer of control from EarthLink to Windstream. The FCC's Wireline Competition Bureau and International Bureau opened the public comment period Dec. 2.
"The Bureaus find, upon consideration of the record, that grant of the applications will serve the public interest, convenience and necessity," the filing reads. "We find that the proposed transaction presents no significant competitive harms and should likely result in some public interest benefits related to network efficiencies and the increased ability of the combined company to serve customers on its own facilities."
Combining the companies will result in a fiber network covering 145,000 miles across the U.S. Cost reduction of at least $125 million is expected as part of the deal.
Windstream, which employs 12,000, including 1,500 in Arkansas, provides telephone and Internet service to about 1.4 million residential customers across the U.S. It also offers services to business customers.
Chief Executive Officer Tony Thomas was unavailable for comment Friday, but said Nov. 7 that the merger will help Windstream "create a stronger and ready company." EarthLink's network quality was one of the selling points for Windstream, Thomas said at the time.
Windstream stock finished trading Friday at $8.05, down $0.04. Shares of EarthLink ended the day at $6.20, down $0.02.
Avery said Windstream will continue to consider acquisition as a strategy for future growth.
"We routinely evaluate acquisition possibilities with the goal of creating value for shareholders," Avery said. "As always, we will take a disciplined approach that is mindful of leverage and the ability to advance our strategy by expanding geographically, adding fiber infrastructure and expanding our capabilities."
Business on 01/21/2017