Uniti Group and Windstream Holdings II LLC announced last Friday that the two companies have agreed to a merger, which will combine Uniti’s nationwide wholesale fiber optic network with Windstream’s fiber to home business.
According to the transaction terms, Windstream shareholders will receive $425 million in cash, $575 million in preferred shares of the newly merged company, and approximately 38% of the issued common shares of the merged company. Uniti shareholders will receive approximately 62% of the issued common stock equity of the merged company.
Some of Windstream’s largest shareholders, including Elliott Investment Management, who are currently holders of Uniti’s equity and debt, will roll over almost all of their investment value in Windstream to the merged company. The transaction structure keeps the existing debt structure of the two companies unchanged at the end of the transaction, thereby reducing financing requirements and costs.
John Weber, portfolio manager at Elliott, said, “We believe that given Uniti’s focused strategy, unique positioning, and mature management team, which will attract leaders from both organizations, the merged company will be in a favorable position to unleash its potential.”
The merged company will initially serve over 1.1 million customers and will have strong operations in the Midwest and Southeast.
After the merger of Uniti and Windstream, it is expected to generate a target operating expense synergy of up to $100 million and a target capital expenditure savings of $20 million to $30 million within 3 years after the transaction is completed.
The merger is expected to be completed in the second half of 2025, depending on the completion conditions, including receiving approval from regulatory authorities and approval from Uniti shareholders.