Windstream, Uniti reunite in $13.4 billion merger

Privately-held Windstream and publicly-traded Uniti Group – two Little Rock-based companies that once were a combined entity – are reuniting in a proposed $13.4 billion merger.

Uniti Group, then known as CS&L, spun off from Windstream when it was a publicly-traded company nearly a decade ago. Uniti is a real estate investment trust (REIT) that owns wireless towers and fiber operations, while Windstream is a telecommunications and broadband company with with heavy operations in the Midwest and Southeastern U.S. The two entities went through years of litigation over contract arrangements, a move that contributed to Windstream’s reorganization bankruptcy in the late 2010’s. Windstream is Uniti’s largest customer.

The new deal, which has been approved by both company’s board of directors, brings the companies back together. The transaction factors in about $4.4 billion in company revenues, $8 billion in corporate debt, $425 million in cash, and $575 million in preferred equity.

The combined company will initially have an estimated 1.1 million customers and 1.5 million existing homes with a particularly strong presence in the Midwest and Southeast.

“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,” said Uniti President and Chief Executive Officer Kenny Gunderman.

Gunderman and Paul Bullington, Uniti’s chief financial officer, will lead the company, according to a press release. Key members of Windstream’s management team are expected to remain with the combined company. The merged firm will continue to operate as Uniti under the ticker “UNIT” and be headquartered in Little Rock.

The transaction is expected to close in the second half of 2025 subject to regulatory and shareholder approval.

“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,” said Johannes Weber, portfolio manager at Elliott Investment Management, Windstream’s largest shareholder.

The transaction is expected to be free cash flow accretive following close and will realize additional free cash flow accretion as synergies are achieved. The combination is anticipated to generate up to $100 million of targeted annual operating expenses synergies and $20 million to $30 million of targeted annual capital expenditures savings within 36 months of closing.

Under the terms of the agreement, 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. Uniti shareholders will hold approximately 62% of the outstanding common equity of the combined company.

Windstream shareholders also will 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.

Some 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.

Following the close of the transaction, the five-person Uniti board of directors 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.

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.