DOW JONES NEWSWIRES 
 

Windstream Corp. (WIN) will buy Pennsylvania-based D&E Communications Inc. (DECC) for about $159 million in cash and stock, a deal that will nearly double the telecommunications company's presence in the state.

The move comes amid continued consolidation in the telecom sector, as bigger players snap up smaller ones to boost their operations. Wireline phone companies like Windstream and D&E have been expanding into digital video and high-speed Internet services as demand for landline phones continues to decline amid the weak housing market and the popularity of cell phones.

D&E shareholders will receive 0.65 shares of Windstream stock and $5 in cash for each D&E share under the deal. That values D&E at about $10.88 a share, a 61% premium to its closing price of $6.75 Friday.

Windstream said it will issue about 9.5 million shares valued at $86 million based on Friday's closing price and pay about $73 million in cash. Windstream said it will also assume about $171 million of debt. It will finance the deal with existing cash and the current capacity of its revolving credit agreement.

Windstream's shares were recently down 2.7% at $8.81 in premarket trading. D&E's were unchanged from Friday's close.

Windstream will add about 165,000 access lines and about 44,000 high-speed Internet customers through the transaction. The company already has about 200,000 access lines in the state, and nearly 3 million in the 16 states it operates in. Windstream will also get six wireless licenses in central Pennsylvania.

The deal is expected to close in the second half of the year.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com