Voice and data services provider Windstream (NYSE: WIN) says it’s reached a deal to buy Paetec Holding for about $891 million in stock.

Little Rock, Ark.-based Windstream Corp. says the addition of Paetec Holding Corp. will expand its focus on business and broadband services.

“This transaction significantly advances our strategy to drive top-line revenue growth by expanding our focus on business and broadband services,” said Jeff Gardner, president and chief executive officer of Windstream. “The combined company will have a nationwide network with a deep fiber footprint to offer enhanced capabilities in strategic growth areas, including IP-based services, data centers, cloud computing and managed services. Financially, we improve our growth profile and lower the payout ratio on our strong dividend, offering investors a unique combination of growth and yield.”

Windstream operates several data centers in North Carolina, including one in North Raleigh that is scheduled to be expanded. Windstream acquired data centers in the Triangle and Charlotte when it bought Hosted Solutions.

Fairport, N.Y.-based Paetec provides voice and data services to businesses.

“Both Paetec and Windstream are built on a customer and employee-focused culture. Together, with far denser network assets, an expansive fiber infrastructure, and larger data center footprint, I believe our brightest days are ahead,” said Arunas Chesonis, chairman and CEO of Paetec. “Our combination now creates a new Fortune 500 company with the financial strength and scale to compete and win against any other provider in the industry. I’m confident that this transaction will deliver substantial long-term value for our customers, employees, and shareholders.”
Under the terms of the deal, Paetec shareholders will get 0.460 shares of Windstream common stock for each of their Paetec shares.

The deal has been approved by the boards of both companies. Windstream expects to issue about 73 million shares worth $891 million, based on its Friday closing stock price.

Windstream also will assume or refinance about $1.4 billion in Paetec debt. Paetec shareholders are expected to own about 13 percent of the combined company at closing.

Read more about the deal here.

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