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PAETEC's XETA Buy Beefs Up Managed Services, Cloud Strategy

By Josh Long
February 09, 2011 - News

PAETEC Holding Corp. on Wednesday announced an agreement to acquire XETA Technologies Inc., a company that provides advanced communications technologies to enterprise customers.

Fairport, N.Y.-based PAETEC said it is acquiring XETA Technologies for $5.50 per share in cash in a deal valued at roughly $61 million.

The companies expect the agreement to close within three months.

PAETEC said XETA will become part of its managed services portfolio, which includes such products as hosted services, service lifecycle management software and Allworx IP-PBXs.

Broken Arrow, Okla.-based XETA focuses on such vertical industries as hospitality, education, healthcare and government sectors.

XETA reported annual revenues of $85.7 million in its fiscal year ending Oct. 31, 2010, and the company expects to bring in roughly $100 million in annual revenues in the fiscal year 2011.

“This transaction highlights our strategy to increase our capabilities to service enterprise CIOs beyond traditional telecom products with advanced managed services and cloud computing solutions," said Arunas A. Chesonis, chairman and CEO of PAETEC, in a statement. “PAETEC and XETA have a consistent national footprint and customer base while offering complementary services."  

Under the acquisition, which is subject to the approval of XETA’s shareholders and other customary closing conditions, XETA will become an indirect, wholly owned subsidiary of PAETEC Holding Corp.

PAETEC expects to employ about 5,100 people nationwide after the acquisition closes.  

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