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Windstream (News - Alert) Corporation, a preferred master agent carrier of TBI, revealed yesterday that it will buy PAETEC Holding Corporation for an impressive $891 million in stock, which is a 27 percent increase over PAETEC’s closing price. Windstream has also agreed to incur $1.4 billion worth of debt, bringing the total cost of the deal to around $2.3 billion.

Referring to the merger as "another significant step in the company’s transformation," a recent channelspartnersonline.com article stated that Windstream will now work to provide services to business customers located in over 46 states and the District of Columbia, and be in charge of 100,000 fiber route miles spanning across the country. Rich Tehrani (News - Alert), CEO of TMC, wrote in a recent blog post, “With the massive need for bandwidth for things like wireless backhaul, the combined company with 100,000 fiber route miles is in a great position to cash in on the future need for broadband speed.”

“This deal positions Windstream as a major force in the communications space and it will be worth watching what it decides to do with the various businesses PAETEC is in. Will it choose to invest and grow them – selling TEM services to its current customers or will it make sense to focus just on cloud-based services for the future and divest some businesses, which may be considered non-core,” he added.

Additionally, Windstream will power data center services all over the U.S. and has greatly increased functionalities that the company can offer multi-location business customers.

“This transaction significantly advances our strategy to drive top-line revenue growth by expanding our focus on business and broadband services," said Jeff Gardner, president and CEO of Windstream in a statement. “The combined company will have a nationwide network with a deep fiber footprint to offer enhanced capabilities in strategic growth areas, including IP-based services, data centers, cloud computing and managed services. Financially, we improve our growth profile and lower the payout ratio on our strong dividend, offering investors a unique combination of growth and yield."

Tehrani added, “Earlier this year I reported that PAETEC CEO Arunis Chesonis was looking for potential acquisition targets in India and elsewhere, and in fact the company did just pick up XETA Technologies (News - Alert) to boost its cloud-based service offerings. Interestingly his own company may have been in play while PAETEC itself was exploring more acquisition targets. Large companies keep getting larger– and not just the largest, AT&T (News - Alert) and T-Mobile (if it closes), Verizon purchased Terremark and CenturyLink recently picked up Savvis.”

At this time, this deal is still going through the regulatory approval process.