Deal will create the first managed services local exchange carrier able to provide a full range of IP voice, security, VPN and Internet services nationwide
Seattle WA, San Jose and Costa Mesa, CA - June 10, 2010 - Speakeasy, a Best Buy company (NYSE:BBY), has entered into an agreement to combine its business with Covad Communications Company and MegaPath Inc. in a deal that will create the first managed services local exchange carrier (MSLEC) able to provide a full range of IP voice, security, VPN and Internet services nationwide. The transaction is expected to close in the third quarter of 2010, contingent upon closing of the previously announced transaction between MegaPath and Covad. Financial terms will not be disclosed.
This transaction will combine Speakeasy's market-leading small business voice and data services with MegaPath's wide selection of products and value-added services for distributed enterprises, and make them available over Covad's intelligent, nationwide broadband network.
"The combination of Covad, MegaPath and Speakeasy will create the next-generation CLEC—an MSLEC that can offer customers and partners a full suite of managed IP broadband services and access over a powerful national network," said D. Craig Young, MegaPath CEO. "With the additional resources, mature channels and enhancements to the service portfolio, we expect the combined companies to extend their leadership position in the SMB, enterprise and wholesale markets."
Through a combination of direct sales and a national network of more than 8,000 IT consultant partners, Speakeasy has experienced significant customer growth, with more than 30,000 small business customers nationwide. Best Buy acquired Speakeasy in 2007 and will continue to be a minority investor going forward.
"Speakeasy brings small business expertise, well-developed market channels and technology expertise—especially in VoIP—to help the combined businesses dramatically accelerate growth," said Bruce Chatterley, Speakeasy president and CEO.
"Covad's intelligent broadband services platform and advanced network capabilities will provide an exceptional foundation for the collective product portfolios of Speakeasy and MegaPath," said Pat Bennett, president and chief executive officer of Covad. "This combination of companies will make these services available to millions of small, medium and large business nationwide directly or through our wholesale partners."
Prior to the close of this transaction, the companies will continue to be led by their respective management teams. Upon closing, the companies plan to continue to serve the market through two divisions: a wholesale operating division and a direct, commercial division. Craig Young, current CEO of MegaPath, will become executive chairman of the combined businesses; reporting to Craig will be Pat Bennett who will continue as CEO of Covad Communications, and Bruce Chatterley, current CEO of Speakeasy, who will be president of the commercial unit in charge of all non-wholesale customer sales and marketing division.
"We are excited about the vision and capabilities of this new business entity," said Glen Swanson, senior vice president, Business Customer Group, a unit of Best Buy serving the needs of small businesses. "As part of the Covad and MegaPath combination, Speakeasy will add significant capabilities to the new venture while providing Best Buy, through its continued investment, with a platform for additional learning about the business customer segment."
Covad, a Platinum Equity company, is a leading national provider of integrated voice and data communications, combining broadband solutions with mission-critical service and support to create a superior customer experience. The company provides a wide range of access and hub aggregation services, including Ethernet, T1, and DSL. Covad manages a robust, next-generation IP/MPLS network that efficiently delivers integrated voice, video, and data solutions. With an expanded footprint supported in part by more than 4,400 COs, Covad broadband services are currently available across the nation in 45 states and 240 metropolitan statistical areas (MSAs) and can be purchased by approximately 11 million businesses, representing over 60 percent of all U.S. businesses. Covad is located at 2220 O'Toole Avenue, San Jose, CA 95131. Website: www.covad.com.
About MegaPath Inc.
MegaPath is the leading provider of managed IP communications services in North America. MegaPath leverages its wide selection of broadband connectivity, Virtual Private Networks, Voice over IP (VoIP) and security technologies to enable businesses to lower costs, increase security and enhance productivity. Businesses of all sizes can easily and securely communicate between their headquarters, branch offices, retail locations, mobile workers, and business partners. To learn more about why over 19,000 companies have chosen MegaPath’s managed IP data, voice and security services to improve their business communications, visit www.megapath.com or call 1-877-MegaPath (634-2728).
Speakeasy is one of the nation's leading broadband voice (VoIP), data and IT service providers. Speakeasy helps small businesses succeed by offering simplified voice and data solutions that improve the customer experience, increase employee productivity and help cut costs. Based in Seattle, Speakeasy has provided award-winning customer service since 1994 and joined the Best Buy family of companies in April 2007, working with Best Buy for Business to champion technology for small businesses throughout the U.S. Visit Speakeasy at www.speakeasy.net or call 800-556-5829. Follow Speakeasy on Twitter at Speakeasynet.