Thursday, September 21, 2006

Cavalier to Acquire Talk America for $251 Million

Cavalier Telephone & TV agreed to acquire Talk America, a leading CLEC, for $251 million. The price of $8.10 share represents a 23% premium over Talk America's closing price as of Thursday, September 21st, 2006.



On a pro forma basis, the combined companies are projecting over $750M in revenue, $130M in adjusted EBITDA and $50M in free cash flow (EBITDA minus CAPEX and interest expense) in 2006. The combined companies currently serve over 550,000 residential customers, 85,000 business customers and employ over 2,000 people. After the acquisition is completed, Cavalier will serve customers in 6 of the top 20 metropolitan services areas (MSAs) in the country, including Atlanta, Baltimore, Cleveland, Detroit, Philadelphia and suburban Washington, DC.



"We believe that this acquisition combines the strengths of two of the nation's most robust competitive carriers. Talk's state-of-the-art back office support system and Cavalier's advanced network architecture will help provide our combined customers the newest and most advanced telecommunications' solutions in the marketplace. Since our inception, Cavalier's focus has been to develop facilities-based networks capable of delivering the highest quality voice and data products. Cavalier's networking capability can now be leveraged with Talk's core Michigan, Ohio and Southeastern markets. Additionally, the cost savings that we will be able to capture and revenue synergies that we will generate from this acquisition, will provide substantial accretive value to the business," commented Cavalier's CEO Brad Evans.



Following closure of the deal, Evans will become Executive Chairman of Cavalier and Talk America's CEO, Ed Meyercord, will assume the role of CEO for Cavalier.

http://www.cavtel.comhttp://www.talk.com

  • Earlier this year, Cavalier Telephone launched an MPEG4 over ADSL2+ IPTV service in Richmond, Virginia. The deployment uses Tut Systems' Astria content processor,
    Amino's MPEG 4 set-top box and SecureMedia's Encryptonite System CA/DRM software.


  • In January 2006, Cavalier Telephone completed its acquisition of Elantic Telecom (formerly known as Dominion Telecom), which operates an 8,200 route mile fiber network connecting major cities on the Eastern portion of the United States. For the past 18 months, Cavalier has been providing management, engineering and operating support to Elantic through a management services agreement.


  • The Elantic fiber network connects over 52 cities in a self-healing fiber ring design. The network reaches west from Chicago, and North thru New York, expands down the East coast and South to Wilmington, North Carolina. The network also includes former Telergy assets that were deployed throughout many metropolitan areas in New York state. The largest concentration of fiber is in Virginia where fiber rings encircle much of the state. Over $1 billion dollars was invested to create the Elantic footprint.


  • Talk America recently began promoting a service bundle featuring broadband with 6 Mbps download speeds and a nationwide unlimited voice service at a price below $70 for business customers and $50 for residential customers.

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