Uniti to Merge with Windstream Creating Premier Insurgent Fiber Provider

Uniti announced that it has entered into a definitive agreement to merge with Windstream. Under the terms of the agreement, which have been unanimously approved by both companies’ Board of Directors, upon closing, Uniti shareholders will hold approximately 62% of the outstanding common equity of the combined company and Windstream shareholders will hold approximately 38% of the outstanding common equity.

The merger combines Uniti’s national wholesale owned fiber network with Windstream’s fiber-to-the-home business to create a premier insurgent fiber provider in the U.S. We believe the combined company, with its scaled facilities-based infrastructure platform, will be uniquely positioned within Tier II and III markets throughout the U.S. “As a combined company, we will continue our disciplined growth trajectory while expanding FTTH buildouts and significantly improving our overall financial profile. The demand for fiber broadband has never been greater, and Uniti is now expanding its reach into FTTH with an attractive scaled platform. The combination of Uniti and Windstream also removes several dis-synergies that exist in the current landlord/tenant relationship and greatly enhances Uniti’s optionality for strategic initiatives. We look forward to working with Windstream to create a national fiber powerhouse that will continue to bridge the digital divide for our customers,” commented President and Chief Executive Officer of Uniti, Kenny Gunderman.

Johannes Weber, Portfolio Manager at Elliott Investment Management, Windstream’s largest shareholder, added, “As one of the largest investors in both Uniti and Windstream, we are pleased to support this combination, which has a compelling strategic rationale and creates a significant opportunity for enhanced value creation. We are confident that given Uniti’s focused strategy, unique positioning and a proven management team that will draw on leaders from both organizations, the combined company will be well positioned to deliver on its potential.”

Premier Digital Infrastructure Company: The merger of Uniti and Windstream combines Uniti’s national wholesale owned network with Windstream’s FTTH business. The combined company will initially serve over 1.1 million customers and 1.5 million existing homes passed with a particularly strong presence in the Midwest and Southeast. Uniti will be well-positioned in the large and growing market for digital infrastructure services, particularly in Tier II and III markets, with a highly defensible market position as a first mover fiber builder.

Compelling Financial Profile with Enhanced Cash Flow Generation: The combined company expects to benefit from an enhanced free cash flow profile, with the ability to expand its FTTH build by up to 1 million additional households. The transaction is expected to be free cash flow accretive following close and will realize additional free cash flow accretion as synergies are achieved.

Aligns Capital Allocation Objectives and Delivers Meaningful Synergies: The combination is expected to remove several dis-synergies which exist in the current landlord/tenant relationship, as well as any potential risk to the renewal of the master leases scheduled to occur in 2030. It also aligns the two companies’ capital allocation objectives to improve focus and drive results. The combination is anticipated to generate up to $100 million of targeted annual opex synergies and $20-$30 million of targeted annual capex savings within 36 months of closing.

De-levered Balance Sheet: Net leverage at year-end 2023 for the combined company is 4.8x, which is a significant improvement over Uniti’s year-end net leverage of 6.0x, with growth and free cash flow generation expected to improve the combined company’s leverage trajectory over time. Both companies’ current debt silos are expected to initially remain in place following closing.

Enhanced Strategic Optionality: With a scaled national platform and high-quality fiber portfolio, the additional value creation from this transaction greatly increases Uniti’s optionality for strategic initiatives.

Under the terms of the agreement, Uniti shareholders will receive approximately 62% of the outstanding common equity of the combined company. Windstream shareholders will receive $425 million of cash, $575 million of preferred equity in the new combined company, and common shares representing approximately 38% of the outstanding common equity of the combined company. Windstream shareholders will additionally receive non-voting warrants to acquire up to 6.9% of common shares of the combined company. Uniti expects to fund the $425 million of cash consideration to shareholders of Windstream from operations, revolver borrowings and/or future capital markets transactions. Certain of Windstream’s largest shareholders, including Elliott, which is also a current holder of Uniti’s equity and debt, will be rolling substantially all of their investment value in Windstream into the combined company. The transaction structure allows both companies’ existing debt structures to remain in-place at closing, reducing financing requirements and costs.

The combined company will be led by a proven management team that reflects the strengths and capabilities of both organizations. Upon closing of this transaction, the combined company will be led by Kenny Gunderman, Uniti’s Chief Executive Officer, and Paul Bullington, Uniti’s Chief Financial Officer. Certain key members of Windstream’s management team are expected to remain with the combined company as well. The combined company will continue to operate as Uniti under the ticker “UNIT” and be headquartered in Little Rock, Arkansas.

Following the close of the transaction, the 5-person Uniti Board of Directors (the “Board”) will remain in place and four new directors will join the board of the combined company, with two of those directors selected by Elliott and the remaining two directors jointly selected by Uniti and Elliott.

The merger is expected to close in the second half of 2025, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by Uniti shareholders.

Bank Street Group LLC, Barclays, Centerview Partners, and Citi are acting as co-financial advisors to Uniti. J.P. Morgan and Stephens Inc. each acted as financial advisors to Uniti’s Board and provided fairness opinions. Davis Polk & Wardwell LLP is acting as legal counsel to Uniti. Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC are acting as financial advisors to Windstream. Debevoise & Plimpton LLP is acting as legal counsel to Windstream.

Uniti will hold a conference call today to discuss the announcement at 8:30 AM Eastern Time (7:30 AM Central Time). The conference call will be webcast live on Uniti’s Investor Relations website at investor.uniti.com. Those parties interested in participating via telephone may register on the Company’s Investor Relations website or by clicking here. A replay of the call will be available on the Investor Relations website beginning today at approximately 12:00 PM Eastern Time. Associated presentation materials regarding the transaction will be available on Uniti’s transaction microsite at unitireimagined.com and Uniti’s Investor Relations website.

This communication and the information contained in it are provided for information purposes only and are not intended to be and shall not constitute a solicitation of any vote or approval, or an offer to sell or solicitation of an offer to buy, or an invitation or recommendation to subscribe for, acquire or buy securities of Uniti Group Inc. (“Uniti”), Windstream Holdings II, LLC (“Windstream”) or the proposed combined company (“New Uniti”) or any other financial products or securities, in any place or jurisdiction, nor shall there be any offer, solicitation or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made in the United States absent registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or pursuant to an exemption from, or in a transaction not subject to, such registration requirements.

Source: Uniti media announcement