Paetec to buy Cavalier for $460 mn

NEW YORK, USA: Telephone service provider Paetec Holding Corp has agreed to acquire privately held rival Cavalier Telephone LLC for $460 million in cash, the companies said on Monday.

Through the deal, which is expected to close within four to six months, Paetec plans to expand its network to serve consumer and business broadband users. Cavalier's majority owner is M/C Venture Partners, a Boston-based private equity firm.

The transaction is the latest in a rash of acquisitions among smaller U.S. telephone companies who have been depending on acquisitions for growth as consumers have been disconnecting home phones in favor of cellphones. Rival CenturyLink Inc's agreement to buy Qwest Communications International Inc for about $10.6 billion in stock is still being reviewed by regulators.

Paetec expects to have operations in 86 of the top 100 metropolitan areas after the deal. The combined company would have had about $1.950 billion in revenue for the 12 months that ended June 30, Paetec said.

Fairport, New York-based Paetec provides data, voice and Internet solutions to business-class customers. Virginia, headquartered Cavalier provides telecommunications solutions for business and consumer customers, including network and data solutions for carriers.

Paetec's advisors in the deal included Deutsche Bank AG and BofA Merrill Lynch, while Cavalier's advisers included Evercore Partners.

Paetec shares were up 15 cents, or 3.6 per cent, at $4.30 in early afternoon trading on Nasdaq.