June 30--MANKATO -- Longtime Mankato-based Enventis is being purchased by Consolidated Communications Holdings of Illinois in a $350 million all-stock deal.
Consolidated, one of the largest independent communications companies in the country, will acquire 100 percent of the 13.8 million Enventis shares
Shareholders of the 116-year-old Mankato company, formerly called HickoryTech, will receive 0.7402 shares of Consolidated stock for each share of Enventis (formerly HickoryTech) stock.
John Finke, Enventis CEO, said the future of the 290 employees in the Mankato area won't be known until the deal is finalized in the fourth quarter.
"I wish I could be a little more specific on that. There should be no immediate effects on operations or employees," Finke said. He said that the companies will be discussing "integration and what the company will look like" in the coming months.
Based on the closing price of Consolidated on Friday, the deal represents $16.50 per share for each Enventis share equating to a premium of 17.4 percent over the Enventis closing price on Friday, or 27.2 percent over the past 90-day average share price.
Consolidated Communications is maintaining its current annual dividend policy of about $1.55 per share, which it has consistently paid since its initial public offering in 2005.
The combined company will have about $785 million in revenue and $332 million in adjusted income for the 12 months ending March 31.
Companies similar in services, history
"This transaction combines two companies with similar strategies and cultures, resulting in a financially strong company with a robust balance sheet and attractive dividend payout ratio," Bob Currey, Consolidated CEO said in a statement.
"Enventis has built a strong business delivering competitive business and broadband services over a 4,200 route mile fiber network. The combination and additional markets creates a broader platform from which to grow and expand."
Finke said the two companies, both of which grew from more than century-old local phone companies, are very similar in their services and offerings to largely rural and smaller city areas.
"They're very much a company like we are. A company with a long history and long roots."
Finke said Consolidated's digital television service is very similar to what Enventis customers now have. Consolidated has 100,000 TV customers while Enventis has 12,000.
He said current Enventis Internet customers also won't have to change their email addresses if they continue with Consolidated.
"From a residential standpoint, the products will look very much the same."
He said business customers' service also will be very similar.
"These announcements always catch employees and community be surprise," Finke said. "But we think it is the best in the long term for our customers and our shareholders."
Enventis, with 500 employees, operates a fiber network spanning 4,200 route miles in Minnesota and into Iowa, North Dakota, South Dakota and Wisconsin. About 80 percent of its revenues come from its business and broadband services.
Enventis serves about 39,000 access lines, 21,000 high-speed internet customers, 12,000 digital TV customers and 90 fiber-to-the tower sites. The business operates six data centers and has a full suite of business communication and IT services, including its recent launch of new and expanded cloud and managed services.
HickoryTech changed its named to Enventis late last year. In recent years the company expanded rapidly into more business services and by expanding its fiber network in Minnesota and neighboring states.
At the end of the first quarter 2014, Enventis had net debt of about $123 million.
Consolidated began in 1894 in Mattoon as the Mattoon Telephone Co.
In 2004, Consolidated bought TXU Communications in Texas outside of the Houston area, and in 2007, it bought North Pittsburgh Telephone Co. In 2012 Consolidated bought California based SureWest for $341 million.
Consolidated provides services to both residential and business customers in California, Kansas, Missouri, Illinois, Texas and Pennsylvania -- and now in the Enventis service area, which includes Des Moines, Mankato, Minneapolis, Fargo and Duluth.
End of an era
The sale of Enventis means the loss of one of the oldest businesses based in Mankato. The Mankato Citizens Telephone was started by a group of businessmen in 1898.
According to the book "Our Family Album, A Company History From 1898," the phone company, in 1921, became the third business in Minnesota to provide group life insurance to all employees.
In 1969 the company formed Mid-Communications Inc. and bought the small telephone exchanges in Blue Earth County, giving private-line dial service to more than 7,700 subscribers on farms and in rural towns.
In 1972 the phone company laid a fiber optic cable from MCTC offices at Minnesota State University, allowing for 672 conversations to take place on one fiber line.
In the late 1980s there were more than 25,000 subscribers in the Mankato area.
In the mid 1990s the company, then called HickoryTech, was listed on the stock exchange and began buying other telephone exchanges, introduced Internet access and moved into providing cable TV services.
In recent years the company rapidly expanded fiber networks around Minnesota and in neighboring states and focused more on providing services to businesses.
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