Enventis Corp., the century-old Mankato telephone company that expanded into business services and broadband, said Monday that it is being acquired by Consolidated Communications Holdings of Illinois for $350 million.
Consolidated executives told investors and analysts that they were attracted to Enventis because of its upgraded cloud-computing services and its telecom equipment sales-and-service business.
Enventis, formerly called HickoryTech, has 500 employees and long been a fixture on the southern Minnesota business scene and a key holding of investors in the region.
About 300 Enventis employees are based in Mankato, and it also does business in Iowa, North and South Dakota and Wisconsin. Last year, Enventis earned $7.7 million on revenue of $189.2 million.
"The combined companies will offer greater scope and scale, and we'll be a more effective competitor," Enventis CEO John Finke said in an interview. "And spreading the cost of investments over a bigger customer base will be more economical."
In Consolidated, Enventis is joining another century-old phone company that branched into business services and broadband. Based 180 miles south of Chicago in Mattoon, Ill., it does business in California, Kansas, Missouri, Illinois, Texas and Pennsylvania. Last year it earned $30.8 million on revenue of $601.6 million.
Enventis stock rose $1.79, or 12.7 percent, to close at $15.84 on the news. Consolidated Communications stock dropped 5 cents, or about 0.2 percent, to close at $22.24.
Consolidated, which is taking on $123 million in Enventis debt in the deal, said in a statement that it expects the merger to yield $14 million in annual savings within two years of closing, expected to be in the fourth quarter.
Jennifer Spaude, an Enventis spokeswoman, said she couldn't comment on whether there would be layoffs to reach those savings but noted that there is no territory overlap between the firms.
"None of those decisions about how the companies will be integrated have been made yet," Finke said, including, he added, his own future role.
Enventis was founded in 1898 as the Mankato Citizens Telephone Co. At the time, most of Minnesota's rural areas lacked phone service, and dozens of hometown phone companies grew up to serve the need. Minnesota still has many of these small, community-oriented phone companies.
But Mankato Citizens had bigger ambitions. It adopted the folksy-sounding, but geographically neutral, HickoryTech name in 1985, when it was still primarily a local telephone company in southern Minnesota and parts of Iowa.
In 1998, HickoryTech expanded to other parts of Minnesota, and in 2005 it acquired Enventis Telecom of Duluth, which provided an entry to the Twin Cities business telecom market. To emphasize its business focus, HickoryTech began using the Enventis name everywhere except in its original local telephone territory. In May of this year, HickoryTech formally changed its name to Enventis.
Finke said the stage for Monday's acquisition was set when HickoryTech acquired Enventis and shifted into business services and broadband markets.
"We diversified for the long run," Finke said. "And I think the success of that plan rose to the top. Consolidated recognized our value and they approached us."