Consolidated Communications to Buy North Pittsburgh for $375 Million

Consolidated Communications said Monday it will acquire North Pittsburgh Systems for $375 million ($25/share) -- a 17.6% premium on Friday's close. North Pittsburgh has been under pressure from activist investor Phillip Goldstein/Bulldog Investors to sell the company; they say it's worth $28.50-31/share. North Pittsburgh shareholders can take either $25 or 1.1 Consolidated shares for each share. Consolidated plans to finance the cash portion of the purchase price with debt and cash on hand; financing will come from Wachovia, which was also Consolidated's advisor on the purchase. "North Pittsburgh delivers an attractive market, a strong network, and a history of success, providing a solid foundation on which we can build," the company said. Its "advanced network... can be leveraged to increase the penetration of broadband products and, with limited capital investment, to rollout video service. Approximately 99% of North Pittsburgh access lines are currently DSL capable and Consolidated expects to launch its video product in the Western Pennsylvania markets in 2008," it said. Consolidated says the acquisitions will boost its free cash flow in its first year.

Sources: Press release, MarketWatch, Seeking Alpha
Commentary: Bulldog Investors Once Again Urges North Pittsburgh Systems to Sell
Stocks/ETFs to watch: Consolidated Communications Holdings Inc. (CNSL), North Pittsburgh Systems Inc. (NPSI)

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