PEG Bandwidth: CS&L to Buy PEG Bandwidth in $409M Deal

Communications Sales & Leasing Inc. of Little Rock on Thursday announced its first acquisition, a $409 million deal for PEG Bandwidth LLC, a telecommunications infrastructure provider owned by affiliates of private equity investment firm Associated Partners LP of New York and Pennsylvania.CS&L, a publicly traded real estate investment trust spun off from Windstream Holdings Inc. of Little Rock last year, called PEG "a leading provider of infrastructure solutions including cell site backhaul and dark fiber for telecom carriers and enterprises." It said PEG has a fiber network of more than 300,000 strand miles in Illinois and the northeast and south-central regions of the country.Shares of CS&L (Nasdaq: CSAL) spiked on word of the deal, up more than 7 percent to about $21.25 on Thursday. The stock closed at $19.79 on Wednesday."PEG Bandwidth is a compelling and strategic acquisition for CS&L with a rich fiber-to-the-tower network, respected management team, and strong customer relationships with over 80% of revenues from the largest wireless carriers," CS&L President and CEO Kenny Gunderman said in a news release. "PEG will provide us a high growth operating platform as we continue to build a fiber rich REIT focused on acquiring and constructing mission critical communication infrastructure assets."The $409 million includes $315 million cash, issuance of 1 million shares of CS&L common stock, and the issuance of 87,500 shares of the CS&L 3% Series A Convertible Preferred Stock. CS&L said it would fund the cash portion of the deal through cash on hand and borrowings under its revolving credit facility.Scott Bruce is the managing director at Associated Partners. CS&L expects him to join its board of directors after the deal closes in April."CS&L is a great partner as PEG continues to grow and diversify its business, and we are thrilled to have a continuing equity interest in CS&L given our assessment of their future prospects," Bruce said.Associated Partners is an investment and operating partnership managed by David and Bill Berkman.Arkansas Business will update this story.