McLeodUSA Pays $2.1 Billion for Splitrock

Telecommunications firm McLeodUSA Inc. Friday shelled out approximately $2.1
billion in stock to acquire Splitrock Services Inc., a broadband
infrastructure company serving Internet service providers and
telecommunication companies.

Splitrock (SPLT)
operates a nationwide data network with a broadband access platform of
asynchronous transfer mode switches in
more than 325 points of presence serving 800 cities and
reaching 90 percent of the U.S. population. The network is designed to
carry voice, data and video traffic over a single network.

Splitrock shareholders will receive 0.5347 of a share of newly issued
McLeodUSA (MCLD)
common stock for each Splitrock share, priced at $30.50 per share. Including
assumed Splitrock debt, the transaction is valued at approximately $2.1
billion.

The acquisition will expand McLeodUSA’s offerings to include Internet access
to its customers. It currently provides communications services to 12
Midwestern and Rocky Mountain states.

“With this transaction,
we have acquired the data and network expertise to accelerate our delivery
of comprehensive data products by 18 to 36 months, while reducing our
capital expenditure for network construction,” said Stephen C. Gray,
McLeodUSA president and chief operating officer. “Moreover, we will be able
to
begin procuring services on the Splitrock network immediately — even before
the transaction is finalized.”

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