Business communications company Paetec Holding Corp. (NASDAQ:PAET) said Wednesday it has agreed to acquire Xeta Technologies (NASDAQ:XETA) in a deal valued at $63 million, including $1.5 million in debt.
Oklahoma-based Xeta sells, installs and services communication technologies for large, multi-national corporate customers. The company is focused on the hospitality, education, healthcare and government sectors. For its 2010 fiscal year ending October 31 2010, it reported revenues of $85.7 million.
The $5.50 per share deal will see Xeta become a part of Paetec's managed services portfolio, which consists of products such as lifecycle management software.
The news has sent Xeta's stock price up by more than 40% to trade at $5.41 as of 2:41pm EST on Wednesday.
"This transaction highlights our strategy to increase our capabilities to service enterprise CIOs beyond traditional telecom products, with advanced managed services and cloud computing solutions," said chairman and CEO of Paetec, Arunas A. Chesonis.
Xeta is expected to generate more than $100 million in revenue for fiscal 2011.
The deal is expected to close within three months, subject to the approval of Xeta shareholders. Both companies' boards have already approved the transaction.
Paetec offers businesses a suite of IP, voice, data, and internet services, as well as enterprise communications management software, network security solutions, and managed services.