Paetec Holding Corp. said it plans to acquire Cavalier Telephone Corp. in a $460 million all-cash deal that will enhance Paetec's last-mile connectivity offerings and reduce its overall expenses through improved cost-structures and network grooming.
Included in the proposed deal is Cavalier's nearly 17,000 fiber-route miles; the acquisition will broaden Paetec's service area to include operations in 86 of the top 100 metropolitan areas in the U.S. Paetec primarily serves business customers and the acquisition of Cavalier will increase its presence in the Midwest and Eastern U.S.
"This planned acquisition of Cavalier fits our strategic plan to add both fiber assets and regional density to better serve our customers and realize increased network synergies, both in the local loop and long haul," said Arunas A. Chesonis, Paetec's chairman and chief executive officer, in a statement. "Cavalier's fiber infrastructure, network assets and corporate culture make it a perfect match for Paetec."
Cavalier's Intellifiber Networks subsidiary will be a major asset for Paetec. The network runs through more than 12,000 miles among major cities in the Midwest and Eastern US. More than 4500 miles run throughout some existing Paetec metro areas. The Intellifiber operation delivers scalable network solutions for service providers, enterprises and government customers. Its services include private networks, low latency routing, SONET services, wavelengths, Ethernet and data options. Cavalier is majority-owned by Boston-based M/C Venture Partners.
"This transaction will soon enable us to take advantage of a combined network and resources that are unmatched in the industry and build upon a common culture that is singularly focused on the customer," said Cavalier president and CEO Danny Bottoms.
The acquisition is the latest of several involving telecommunications companies that are replacing timeworn landline services with newer features including data services.