McLeod to Buy Splitrock

Regional phone company McLeodUSA Inc. agreed to buy Splitrock Services Inc. for nearly $2 billion in stock and debt to provide more Internet and data services and compete against SBC Communications Inc. The purchase will give McLeod a network that reaches 800 cities in all 50 states, allowing the company to offer nationwide data services for the first time. The Cedar Rapids, Iowa-based company will exchange 0.5347 share for each Splitrock share and assume about $150 million in debt. The agreement is worth $28.11 a share at Thursday’s closing price, a 27% premium. Shares of Woodlands, Texas-based Splitrock climbed $4.81, or 22%, to close at $26.94 and McLeod rose 69 cents to $53.25, both on Nasdaq. Splitrock’s data network reaches 90% of the U.S. population.