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PAETEC buying Cavalier Telephony – and maybe more on the way

If you haven’t been watching Rochester, New York for a while, it might be time to start. PAETEC (www.paetec.com) has signed a merger agreement to acquire privately-held Cavalier Telephone Corporation (a Metaswitch customer – next week will be interesting…).

In comments reported in the Wall Street Journal, PAETEC could play the role of a “consolidator” in buying up more fiber assets around the country – hope he reminders what happened to WorldCom.

PAETEC is paying $460 million in cash, all cash to acquire Cavalier and will add nearly 17,000 fiber route miles to PAETEC’s existing service footprint. 

When the smoke clears, the combination of the two companies would have generated $1.95 billion in revenue and $381 million in adjusted EBITDA ending on June 30 on a pro forma basis, including $30 million in expected “run rate synergies” in year two and annual thereafter.

PAETEC will get an increase of 95 percent in its collocations with a local presence in 86 of the top 100 Metro Statistical Areas and a presence in 1,178 collocations.

Cavalier’s subsidiary Intellifiber Networks has about nearly 17,000 route miles and is estimated to represent $2 billion of investment, so by that benchmark, PAETEC is getting a deal at $460 million in cash.

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