Consolidated Communications Completes Acquisition of SureWest Communications

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Published on July 5 2012 7:16 pm
Last Updated on July 14 2013 4:07 pm
Written by Greg Sapp

Consolidated Communications Holdings, Inc. ("Consolidated") (Nasdaq:CNSL) announced that it has completed the previously announced acquisition of SureWest Communications, Inc. ("SureWest") (Nasdaq:SURW), for approximately $324 million, exclusive of debt, based upon the closing price of Consolidated's common stock on June 29, 2012.

"We are excited to complete this process and are looking forward to the opportunities that lie ahead," said Bob Currey, Consolidated's President and Chief Executive Officer. "This transaction with SureWest brings together our consistent cash flows with SureWest's growth to
create a financially strong company with a robust balance sheet and attractive dividend payout ratio. The combined company provides a diverse set of revenues and cash flows across multiple markets resulting in a stronger, more competitive company."

The merger agreement provided that each record holder of SureWest common stock could make one of the following elections, or a combination of the two, at or prior to the Election Deadline, regarding the type of merger consideration they wish to receive in exchange for
shares of SureWest common stock:

  --  a cash election to receive $23.00 in cash, without interest, for each
      share of SureWest common stock, subject to a proration or

  --  a stock election to receive 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 date of the merger, subject to
      a collar so that there will be a maximum exchange ratio of 1.40565
      shares of Consolidated common stock for each share of SureWest common
      stock and a minimum of 1.03896 shares of Consolidated common stock for
      each share of SureWest common stock, subject to a proration.

Overall elections were subject to a proration so that 50% of the SureWest shares (treating equity award shares as outstanding shares) will be exchanged for cash and 50% for Consolidated stock.

The average trading prices for the 20-day period ending two days before the closing date of the merger was $14.44. As a result, at the effective time of the merger, 50% of the shares of SureWest common stock (treating equity award shares as outstanding) converted into the
right to receive $23.00 in cash, without interest, per share, for an approximate total of $170 million in cash, and each of the remaining shares of SureWest common stock converted into the right to receive 1.40565 shares of common stock of Consolidated, or an approximate total
of 10,417,450 shares of the Consolidated common stock.

Consolidated also announced the preliminary results of elections made by SureWest shareholders and the preliminary effect of proration. Of the 14,776,178 shares of SureWest common stock and restricted stock units outstanding immediately prior to closing the merger,
approximately:

  --  956,183 shares were equity award shares, all of which were entitled to
      receive cash;

  --  10,094,049 shares, or 68.3 percent, elected to receive cash;

  --  1,369,712 shares, or 9.2 percent, elected to receive stock; and

  --  2,356,234 shares, or 15.9 percent, did not make an effective election.

As a result, on a preliminary basis, SureWest shares as to which a stock election was made will receive Consolidated common stock; SureWest shares as to which a cash election was made will receive cash for approximately 66.9 percent of those shares and Consolidated common stock for the remainder; and shares with respect to which no effective election was made will receive Consolidated common stock. Consolidated will not issue any fractional shares of stock and, instead, each SureWest shareholder immediately prior to the merger who would otherwise be entitled to a fractional share of Consolidated common stock will receive an amount in cash equal to $14.44 multiplied by the fractional share interest to which the shareholder would otherwise be entitled.