As previously discussed in Note 1, Old Uniti merged with Windstream on August 1, 2025. The total merger consideration of $2,376.6 million was calculated based on the fair value of the consideration transferred, which included the fair value of Common Stock, Preferred Stock and Warrants issued, the Merger Cash Consideration, and the effective settlement of preexisting relationships. The calculation of merger consideration was as follows:


(Millions)
Fair value of Common Stock issued in the Merger (a)	$	733.7
Fair value of Preferred Stock issued in the Merger (b)	630.4
Fair value of Warrants issued in the Merger (c)	142.7
Merger Cash Consideration	370.7
Settlement of preexisting relationships (d)	499.1
Total merger consideration	$	2,376.6

(b)The fair value of 575,000 shares of Preferred Stock issued to Windstream equityholders was determined using a Black-Derman-Toy lattice model incorporating the contractual terms of the Preferred Stock, as well as the risk associated with the Preferred Stock, which was accounted for through the risk free rate term structure and a credit risk adjusted spread of 4.5%.

(c)The fair value of 17,558,406 Warrants issued to Windstream equityholders was based on the intrinsic value of each warrant of $8.13 computed as the difference between the accounting acquirer’s closing stock price on August 1, 2025 and the exercise price of the warrant, which was deemed to be a reasonable proxy of the fair value of the Warrants.

Prior to completion of the Merger, Old Uniti and Windstream had several preexisting relationships primarily comprised of (i) two structurally similar long-term exclusive triple-net lease agreements (collectively, the “Windstream Leases”), which consisted of a master lease (the “ILEC MLA”) that governed assets owned by Old Uniti which were leased and used by Windstream's incumbent local exchange carrier (“ILEC”) operations and a master lease (the “CLEC MLA”) that governed assets owned by Old Uniti which were leased and used by Windstream's consumer competitive local exchange carrier (“CLEC”) operations, (ii) the asset purchase agreement, pursuant to which Old Uniti paid Windstream in exchange for exclusive rights to use certain fiber strand miles leased by Windstream, certain fiber assets (and underlying rights) owned by Windstream, dark fiber IRU arrangements relating to the fiber strand miles and fiber assets, and a 20-year IRU for certain strands included in the transferred fiber assets that Uniti granted to Windstream (the “Asset Purchase Agreement”), and (iii) various other leasing and supplier arrangements between Old Uniti and Windstream.

Upon consummation of the Merger, all historical preexisting relationships between Old Uniti and Windstream were considered effectively settled for accounting purposes and the related transactions and balances became intercompany transactions eliminated in the preparation of the Company’s post-Merger consolidated financial statements. To the extent the settled preexisting contractual arrangement was deemed favorable or unfavorable from the perspective of Old Uniti, the fair value of the off-market component was included in total merger consideration. As of the Merger date, the Windstream Leases were deemed to be above market from the perspective of Old Uniti and the fair value of the off-market component was estimated to be $559.0 million based on the remaining contractual lease payments and current market rates. Conversely, the Asset Purchase Agreement was deemed to be unfavorable from the perspective of Old Uniti and the fair value of the off-market component was estimated to be $(60.0) million based on the estimated remaining value of the upfront payment of the IRU contract. The other leasing and supplier agreements were determined to be at market, and therefore, were effectively settled at the historical carrying value, which had a $0.1 million impact on total merger consideration.

The Merger was accounted for using the acquisition method of accounting, and accordingly, the total purchase price was allocated to the identifiable tangible and intangible assets acquired and liabilities assumed of Windstream based on their estimated fair values as of the Merger date, with the excess amount recorded as goodwill. The following table summarizes the preliminary allocation of the Merger consideration to the identifiable tangible and intangible assets acquired and liabilities assumed of Windstream:


(Millions)	Preliminary Allocation
Fair value of assets acquired:
Cash, cash equivalents and restricted cash	$	141.2
Accounts receivable	315.7
Prepaid expenses and other current assets	283.5
Property, plant and equipment	3,531.0
Goodwill	1,001.1
Customer relationships	750.0
IPv4 addresses	186.4
Trade name	115.0
Spectrum licenses	78.9
Right of way	38.1
Operating lease right-of-use assets	431.9
Other assets	52.7
Total assets acquired	6,925.5
Fair value of liabilities assumed:
Current portion of operating lease obligations	107.4
Accounts payable	125.6
Deferred revenue	132.1
Other current liabilities	417.3
Long-term debt	2,841.2
Noncurrent operating lease obligations	315.2
Deferred income taxes	290.2
Noncurrent deferred revenue	88.3
Pension obligation	103.6
Other liabilities	128.0
Total liabilities assumed	4,548.9
Total merger consideration	$	2,376.6

During the first quarter of 2026, the Company made immaterial measurement period adjustments to its initial purchase price allocation, the effects of which resulted in a net increase in recorded goodwill of $0.2 million. The allocation of the purchase price is preliminary and subject to change based on the finalization of the deferred income tax impacts related to the fair value measurement of assets and liabilities acquired, including property, plant and equipment. The deferred tax analysis requires significant management judgment and the Company has not completed this analysis as of March 31, 2026. Any changes to the initial estimates of the fair value of the assets acquired and liabilities assumed will be recorded as adjustments to those assets and liabilities with the offset charged to goodwill.

Goodwill associated with this acquisition was largely due to synergies expected from combining operations as previously discussed in Note 1. Goodwill recognized in the Merger is not expected to be deductible for tax purposes. The Company allocated the goodwill recognized in the Merger to its reportable operating segments based on the relative fair value of the operating segments. See Note 4.

(b)Includes direct costs incurred in integrating the acquired operations of Windstream, including consulting services, systems and data conversion, network optimization, contract termination fees, rebranding and marketing costs, transaction and retention bonuses, and severance and related employee benefit costs.

The results of Windstream’s operations are included in our consolidated results of operations beginning on August 1, 2025. For the three months ended March 31, 2026, our consolidated results of operations included revenues and sales of $809.3 million and operating income of $103.3 million attributable to Windstream.

The unaudited pro forma information includes adjustments for the settlement of preexisting relationships, amortization for intangible assets acquired, stock-based compensation expense, interest expense for acquisition financing, income tax expense for transaction structuring, and depreciation for property and equipment acquired. The unaudited pro forma information presented is for informational purposes only and is not necessarily indicative of our consolidated results of operations of the combined business had the acquisition actually occurred at the beginning of fiscal year 2024 or of the results of our future operations of the combined business.