From Morningstar: After placing the stock under review following the Windstream merger announcement, we are relaunching coverage of Uniti with a $4 fair value estimate. The big decline from our previous Uniti fair value estimate of $12 is a function of stand-alone Uniti’s fractional level of equity relative to debt, the loss of real estate investment trust, or REIT, status, comparable debt leverage given the cash and preferred equity portions of the deal, and absent planned cost savings.
Uniti’s merger with Windstream will primarily result in Windstream’s business going public, while the bulk of Uniti disappears. About 70% of Uniti’s revenue and 90% of profits come from the firm’s master lease agreement with Windstream. This lease expense for Windstream—and lease revenue for Uniti—will disappear when the firms merge.