Consolidated Communications to consolidate SureWest Communications

Consolidated Communications Holdings, Inc. (NASDAQ: CNSL) has agreed to acquire all of the outstanding shares of SureWest Communications (NASDAQ: SURW) in a cash and stock deal valued at $23.00 per share, or a total of approximately $340.9 million, exclusive of debt. The consideration represents a 47% premium to SureWest’s stock price as of the close on February 3, 2012.

Consolidated Communications Holdings, Inc. (NASDAQ: CNSL) has agreed to acquire all of the outstanding shares of SureWest Communications (NASDAQ: SURW) in a cash and stock deal valued at $23.00 per share, or a total of approximately $340.9 million, exclusive of debt. The consideration represents a 47% premium to SureWest’s stock price as of the close on February 3, 2012.

The acquisition will double the number of states in which Consolidated Communications operates. The telecommunications services firm currently serves customers in Illinois, Texas, and Pennsylvania. The combined companies will serve six states and have approximately 1,775 employees. SureWest currently serves 130,000 residential subscribers and 15,700 commercial businesses in the greater Kansas City and Sacramento regions.

On a pro forma basis, for the 12 months ending September 30, 2011, the combined company would have had revenues of approximately $620 million.

“This transaction combines our cash flow generating business with SureWest’s growth-oriented strategy, resulting in a financially strong company with a robust balance sheet and attractive dividend payout ratio,” said Bob Currey, Consolidated’s president and CEO. “SureWest has built one of the highest quality networks in the industry and transformed itself into a leading broadband provider. The combined company will create a broader platform from which to expand our products and services to meet the demands of our customers. We look forward to working with the SureWest employees to grow the business.”

The agreement calls for SureWest’s shareholders to exchange each share of SureWest common stock for either $23.00 in cash or shares of Consolidated common stock having an equivalent value based on average trading prices for the 20-day period ending two days before the closing of the acquisition, subject to a collar. Overall elections are subject to proration that will ensure that 50 percent of the SureWest shares will be exchanged for cash and 50 percent for stock. The stock portion of the transaction will be received tax free.

Consolidated expects the transaction will be accretive to the company’s free cash flow per share in the first full year following closing, excluding integration costs, and the transaction is deleveraging to Consolidated.

The transaction is not subject to financing conditions. Morgan Stanley Senior Funding, Inc. has provided Consolidated with $350 million of committed debt financing in conjunction with the acquisition. Consolidated will use the funds to refinance the debt of SureWest and pay for the cash portion of the purchase price.

The merger is subject to standard closing conditions including federal and state regulatory approvals and the approval by both Consolidated and SureWest shareholders.


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