Paetec to acquire Cavalier Telephone

Paetec Holdings, which has been one of the buyers amid CLEC market consolidation in recent years, today announced it is acquiring Cavalier Telephone in an all-cash $460 million deal.

It’s a match that should appeal to Eastern U.S. enterprise customers looking for cheaper fiber capacity and co-location. The combined company would have more than 37,000 total fiber miles — more than 10,000 of which are in metro markets — and 1178 co-location facilities.

About 17,000 of those fiber miles will be contributed by Cavalier, which in early 2009 announced a major push into the wholesale fiber market in the East and Midwest regions with its Intellifiber business unit. The number of co-location facilities represents a 95% increase over what Paetec currently has, announcing a major new competitor on that front.

At a time when many CLECs have been taken over by private equity firms, this deal has publicly listed Paetec, of Fairport, N.Y., taking control of privately held, Richmond, Va.-based Cavalier, which is majority owned by M/C Ventures in Boston. Paetec has made several other deals in the last few years, acquiring both McLeodUSA and PBX vendor Allworx in 2007. More recently, Paetec acquired U.S. Energy Partners in March of this year.

Upon closing of the deal, Cavalier would become a wholly owned unit of Paetec, and Danny Bottoms, president and CEO of Cavalier, would join Paetec's executive team.