Another PAETEC Acquisition
Rochester Democrat and Chronicle (NY)
October 13, 2007
Daniel Wallace
Staff writer
Telecom analysts say acquisition trains are roaring across the countryside, and PAETEC Holding Corp. is driving one of the charging locomotives.In less than a month since its last deal, PAETEC made a new acquisition Friday, buying Allworx Corp., a network and consulting company based in East Rochester.
"PAETEC is one of those rising companies leading the pack in this changing industry," said Jeff Kagan, a telecommunications analyst based in Atlanta. PAETEC stock edged up 4 cents on news of the deal, closing at $12.91.
Though small in size, analysts said the East Rochester company is positioning itself to become a large national player in the telecom industry. Company officials said the acquisition would mean more jobs, but they declined to say how many. They also said no Allworx management personnel would be cut.
PAETEC has acquired several companies, most recently Iowa-based McLeod USA Inc. in September in a deal that extended its national reach. PAETEC said it paid $25 million in cash for Allworx. Although it's a relatively small deal, it is a meaningful one for the company.
"Up until now, PAETEC has largely concerned itself with the fiber between customers," said George Conboy, president of Brighton Securities. "With this acquisition they move themselves broadly into what exists at the end of that fiber."
There are two divisions of Allworx, a consulting side and a manufacturing side. The consulting division, which will be headed by PAETEC's chief marketing officer, Jack Baron, provides engineering services and product development for Fortune 500 companies. The East Rochester company has a strong technical competency in hardware and software development, which comes from the roots of its founding partners.
Allworx was founded as a consulting firm in 1998 by a group of Eastman Kodak engineers.
"We believe this represents an exciting opportunity for PAETEC and that we're able to bring an extraordinary and powerful R&D engine into its domain," said George Daddis Jr., president and chief executive of Allworx.
The second division of the company focuses on the design and sale of business telephone systems, which was added to the company in 2003. Allworx has about 40,000 end-users and will likely see revenues as high as $11 million at end of the year. Under the acquisition, Allworx will be a subsidiary of PAETEC and will continue to operate as a separate company. "Their product fits in the perfect sweet spot for those customers we can't service," said PAETEC CEO Arunas Chesonis.
Media Contact:
| Sandra Gault 585.421.3850 x124 press@allworx.com |
