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Covad Communications Company and MegaPath Inc. announced an agreement to combine on March 31, 2010. The transaction closed on September 1, 2010, with Speakeasy included in the completed combination. The resulting privately held company operated under the MegaPath name, bringing together Covad’s broadband network with MegaPath’s managed voice, data and security services.
What happened in the Covad–MegaPath merger?
The companies proposed combining Covad’s national broadband access and IP/MPLS network with MegaPath’s managed IP data, voice and security capabilities. They presented the deal as a way to deliver a broader set of nationwide business communications services through one provider.
The merger announcement described a planned managed-service local exchange carrier offering Ethernet, DSL and T1 access alongside Internet, voice, security and VPN services. Its target customers included small and midsize businesses, enterprise clients and wholesale partners.
Why did the companies combine?
The strategic rationale was complementary reach and services: Covad supplied network access and infrastructure, while MegaPath brought managed-service expertise and distribution. MegaPath CEO D. Craig Young said the companies would focus on expanding service offerings and distribution channels in the SMB, enterprise and wholesale markets.
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Covad reported in 2010 that its services were available through more than 4,400 central offices, across 45 states and 240 metropolitan statistical areas. The company said approximately 11 million businesses—more than 60% of U.S. businesses—could purchase its services. These were Covad’s own pre-merger figures, not independently audited estimates. Covad and MegaPath merger announcement
When did the merger close, and what was the legal structure?
The March 31, 2010 announcement said federal and state regulatory approvals were required and that the companies expected to close by the end of the third quarter. The transaction closed on September 1, 2010, after regulatory approval.
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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 resulted, and what did it offer?
The completed combination included Covad, MegaPath and Speakeasy, which was then a Best Buy company. The combined business retained the MegaPath name, remained privately held and divided operations into wholesale and direct business divisions.
At closing, the company reported more than 85,000 business customers and over 4,500 partners. Those are combined-company figures announced in 2010, rather than current customer or partner counts. Its stated service proposition was a nationwide IP network delivering managed voice, data and security, including Internet access and VPN services. Closing announcement
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Were the financial terms disclosed?
No. The announcement did not disclose the financial terms of the transaction. SEC filing
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