Covad Communications Company and MegaPath Inc. announced a merger agreement on March 31, 2010; the transaction closed on September 1, 2010, with Speakeasy also joining the combination. The resulting privately held company operated under the MegaPath name, combining Covad’s broadband network with MegaPath’s managed voice, data and security services.
What did Covad and MegaPath announce?
The companies said they would combine Covad’s national broadband access and IP/MPLS network with MegaPath’s managed IP data, voice and security capabilities. Their stated aim was to build one of the largest managed-service local exchange carriers in the United States, serving businesses with Ethernet, DSL and T1 access and nationwide Internet, voice, security and VPN services. The announcement described a planned combination, not a completed merger: federal and state regulatory approvals were still required.
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Covad reported that, before the transaction, its services were available in 45 states and 240 metropolitan statistical areas through more than 4,400 central offices. The company said approximately 11 million businesses—over 60% of U.S. businesses—could purchase its services. These were Covad’s own 2010 footprint and availability claims, not independently audited estimates. Covad and MegaPath merger announcement, March 31, 2010
Why did the companies combine?
The strategic logic was to bring network reach and managed-service expertise together. Covad contributed broadband access and an IP/MPLS network; MegaPath contributed managed IP services. Together, the companies said they could offer business customers a broader end-to-end portfolio and expand distribution in small and midsize business (SMB), enterprise and wholesale markets. The announcement did not disclose financial terms.
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When did the merger close, and what was the legal structure?
The agreement was announced on March 31, 2010, with closing expected by the end of the third quarter, subject to federal and state approvals. The transaction closed on September 1, 2010, after regulatory approval. MegaPath, Covad and Speakeasy combination completed, September 1, 2010
A contemporaneous Alabama regulatory filing described the structure as a CCGI-created merger subsidiary merging with MegaPath. MegaPath survived the merger and became a wholly owned direct subsidiary of CCGI. The filing also said the transfer would be seamless for DSLnet customers, with their existing rates, terms and conditions continuing. Alabama regulatory filing
What company did Covad and MegaPath become?
The completed combination included Covad, MegaPath and Speakeasy, then a Best Buy company. It operated under the MegaPath name, remained privately held and organized its business into wholesale and direct divisions. At closing, the combined company reported more than 85,000 business customers and over 4,500 partners; those are company-reported 2010 figures. Closing announcement
What services and customers did the combined company target?
The combined company positioned itself around nationwide IP-based services for SMB, enterprise and wholesale customers. Its announced portfolio included Internet access, voice, VPN and security alongside Ethernet, DSL and T1 connectivity. Its wholesale and direct divisions reflected two routes to market: serving partners and serving business customers directly.
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At closing, MegaPath chairman and CEO D. Craig Young described the goal as delivering “a complete line of end-to-end managed services, including voice, data and security.” Closing announcement
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How should the merger’s scale claims be understood?
The figures in the announcements describe different things at different points in time: Covad’s pre-merger access footprint, and the combined company’s reported customer and partner counts at closing. They are useful indicators of how the companies presented the deal, but should not be treated as audited market measurements or as current company figures.
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