LONDON, UK / ACCESSWIRE / July 6, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Consolidated Communications Holdings, Inc. (NASDAQ: CNSL), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=CNSL. The Company completed the acquisition of FairPoint Communications, Inc. (NASDAQ: FRP) on July 03, 2017. The deal positions Consolidated Communications as the leading broadband and business service provider across a 24-state service area. It is an all-stock transaction valued at approximately $1.3 billion including debt and based on present equity value. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Forward-looking remarks from Bob Udell
Bob Udell, President and Chief Executive Officer of Consolidated Communications stated:
"Consolidated Communications' mission is to turn technology into solutions, connecting people and enriching how they work and live."
He also said:
"We know our customers' needs are changing and this business combination creates a stronger Company with greater scale and resources to serve our customers. We are excited to close on the acquisition and look forward to realizing the many benefits of this merger and leveraging our combined team's expertise."
He also mentioned that the deal will provide financial benefits due to a combination of cost savings and reduced financial leverage, which in turn, will lead to increase in operating and strategic flexibility in future.
Strategic benefits from the deal
Significant expansion in fiber network: This acquisition adds 22,000 fiber route miles to Consolidated Communications fiber network, without any overlapping markets. The combined network spans 24 states and more than 36,000 fiber route miles. This makes Consolidated Communications the ninth largest fiber provider in the US. In fact, Consolidated Communication's on-net buildings increases to 8,800 and fiber-connected towers reach 2,600.
Enhanced portfolio of products and services: With the deal, Consolidated Communications intends to expand its cloud services product suite to FairPoint's markets as well as other broadband enhancements. Thus, the combined Company will be able to offer an even broader range of solutions, tools, and resources covering all customer groups.
Increase in scale through a combination of complementary business strategies: The merger will enable an increase in scale by combining two companies with complementary business strategies.
On-Target Run-Rate Synergies: The transaction is expected to generate annual run-rate cost savings of around $55 million, which is expected within two years after completion of the merger. Consolidated Communications has always met or exceeded its synergy targets.
Stronger Financial Profile: The transaction is expected to be meaningfully accretive to free cash flow per share in the first year. Consolidated Communications will benefit from $300 million in net operating losses (NOLs). It has refinanced FairPoint's debt on very attractive terms. The transaction will also improve its balance sheet and capital structure and will support its current dividend policy to stockholders.
Experienced Team and Expertise: The combined team of approximately 4,400 employees will leverage best practices and greater resources to serve customers.
As per the agreement, FairPoint's stockholders will receive 0.7300 shares of Consolidated Communications' common stock for each share of FairPoint's common stock. However, no fractional shares of Consolidated Communications' common stock will be issued. In place of the fractional share, FairPoint's stockholders will be entitled to receive an equal amount of cash; though this cash amount will be adjusted with the amount of taxes.
No change in dividend policy
Consolidated Communications' Board of Directors had declared a quarterly dividend of $0.38738 per share for the 48th quarter since its initial public offering in 2005. They expect to maintain the annual dividend of $1.55 per share. The next quarterly dividend (of $0.38738 declared on May 02, 2017) would be s payable on August 01, 2017, to stockholders as on record on July 15, 2017.
Management, Board, and Headquarters Updates
While Bob Udell will continue to serve as President and CEO of the combined Company, Steve Childers will serve as CFO. Consolidated Communications has appointed Wayne Wilson, who previously served on the FairPoint's Board, to the Consolidated Communications' Board. The headquarters for the newly combined Company will remain in Mattoon, Illinois, but senior executives will be based throughout the service area.
Earnings and Guidance
Consolidated Communications will report second quarter 2017 earnings on August 03, 2017. The Company will discuss results and other developments for the combined Company on call and update its annual guidance with its second quarter earnings report.
Last Close Stock Review
At the close of trading session on Wednesday, July 05, 2017, Consolidated Communications' stock price was marginally up 0.41% to end the day at $22.04. A total volume of 3.28 million shares was exchanged during the session, which was above the 3-month average volume of 428.43 thousand shares. The Company's shares are trading at a PE ratio of 367.33 and have a dividend yield of 7.03%. At Wednesday's closing price, the stock's net capitalization stands at $1.11 billion.
On Monday, July 03, 2017, the stock closed the trading session flat at $15.95. A total volume of 297.90 thousand shares has exchanged hands, which was higher than the 3-month average volume of 191.89 thousand shares. FairPoint Communications' stock price surged 10.00% in the last one month and 5.63% in the previous twelve months. The stock is trading at a PE ratio of 7.04 and currently, has a market cap of $433.52 million.
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