Windstream Corp.s pending, $310 million acquisition of North Carolinas Hosted Solutions LLC wont affect its corporate credit ratings, according to analysts at Standard & Poors.
Thats because Windstream should finance the deal with cash and revolving debt, a move that wont over-leverage the Arkansas-based operator, which has spent the past couple of years branching out beyond its traditional wireline focus.
The addition of Hosted Solutions will help Windstream expand its broadband and business services units. Hosted Solutions specializes in Web hosting for SMBs. The strategy should fit well with the direction of NuVox, the CLEC Windstream bought last year to jump into the lucrative enterprise and SMB markets.
“Data center space is increasingly in demand among our existing business customers,” said Jeff Gardner, president and CEO of Windstream. “Hosted Solutions is an excellent complement to our existing enterprise service portfolio. For the past decade, they have been delivering highly complex managed hosting solutions to customers of various sizes. In addition, they have a proven track record of growing revenue and generating significant free cash flow.”
The M&A news comes as Windstream reports its third-quarter earnings rose 6.5 percent and profits reached $85.2 million, up from $80 million a year earlier.
Shares of Windstream were poised to close more than 2.2 percent higher at $13.25 on Thursday.