Cavalier Acquisition by PAETEC Fact Sheet
The sale of M/C Partners’ portfolio company, Cavalier Telephone, Inc., a privately-held telephony, data and broadband services provider in the Mid-Atlantic region announced on September 13, 2010 that PAETEC (NASDAQ: PAET) acquired the company in an all-cash transaction. The purchase by PAETEC represents one of the larger CLEC-acquisitions in recent years and follows M/C Partners’ $683 million sale of Southeastern CLEC Nuvox to Windstream (NASDAQ: WIN), which occurred in early 2010.
Cavalier and PAETEC hold leadership positions in the CLEC industry. The transaction combines highly complementary organizations and brings the valuable fiber-optic assets of Cavalier into the PAETEC network. The transaction is expected to generate strong synergies and growth opportunities. The transaction is expected in close in 4 to 6 months.
- In 1999, M/C Partners was the lead investor in the formation of Cavalier Telephone as a start-up company and backed Brad Evans, a serial M/C portfolio entrepreneur, in its formation
- M/C Partners invested approximately $70 million into Cavalier
- M/C Partners believed that ownership and control of network assets would drive sustained value creation in the CLEC industry
- In 2004, Cavalier paid $11 million for 16,800 route miles of metro and inter-city fiber-optic networks, which Dominion Telecom constructed at a cost of $1.3 billion
- Later in 2004, Cavalier consolidated an additional 11,000 route miles of metro and inter-city fiber-optic assets with the acquisition of affiliate company City Signal
- In the first half of 2010, Cavalier Telephone generated $193.4 million in revenues and $44.3 million of EBITDA
- Headquartered in Richmond, VA
M/C Partners Fiber Network Investment Strategy:
You can read more about Cavalier and our other fiber optic investments in our fiber infrastructure case study.
Terms of the Deal:
The principal terms of the transaction include the following:
- The base all-cash valuation of Cavalier Telephone upon closing of the transaction is $460 million