D&E outbids NTELOS for Conestoga

Conestoga Enterprises has signed a conditional merger agreement with D&E Communications, essentially replacing a merger deal between Conestoga and NTELOS announced July 24.

“Our board did not decide they didn’t like the NTELOS deal and start looking for a better deal. It doesn’t work that way,” said Albert H. Kramer, president of Conestoga, an integrated communications provider serving southern and central Pennsylvania. “This is an unsolicited bid from D&E that due to the changes in the price of NTELOS stock the board felt they had a fiduciary responsibility to evaluate.”

The conditional merger is subject to the termination of Conestoga’s prior merger agreement with NTELOS, which was valued at $27.90 per share, or $231 million. NTELOS has until Dec. 7 to decide their next move. NTELOS, which is currently reviewing its options according to a company spokesman, will receive a $10 million termination fee if their merger agreement with Conestoga falls through.

Under terms of the conditional merger agreement between D&E and Conestoga, each Conestoga shareholder can get cash and/or common stock worth $33 for each Conestoga share as long as D&E common stock before the deal’s closing is valued between $13 and $23. The deal is valued at $273.3 million.

Should the stock's value increase to more than $23 per share, Conestoga shareholders will receive 1.4 shares of D&E common stock for each Conestoga share; if the value decreases to less than $13 per share, they will receive 2.5 shares of D&E common stock. The cash portion will remain $33 as long as D&E common stock retains a value of at least 40% of the merger consolidation prior to closing. Conestoga has the option to terminate the agreement if D&E’s stock trades for less than $8 per share for 10 consecutive trading days prior to the deal’s close.