Speakeasy to Combine with MegaPath and Covad

Speakeasy, a Best Buy company, has entered into an agreement to combine its business with Covad Communications Company and MegaPath Inc. in a deal that will create the first managed services local exchange carrier (MSLEC) able to provide a full range of IP voice, security, VPN and Internet services nationwide. The transaction is expected to close in the third quarter of 2010, contingent upon closing of the previously announced transaction between MegaPath and Covad. Financial terms will not be disclosed.

This transaction will combine Speakeasy's market-leading small business voice and data services with MegaPath's wide selection of products and value-added services for distributed enterprises, and make them available over Covad's intelligent, nationwide broadband network.

Through a combination of direct sales and a national network of more than 8,000 IT consultant partners, Speakeasy has experienced significant customer growth, with more than 30,000 small business customers nationwide. Best Buy acquired Speakeasy in 2007 and will continue to be a minority investor going forward.

Prior to the close of this transaction, the companies will continue to be led by their respective management teams. Upon closing, the companies plan to continue to serve the market through two divisions: a wholesale operating division and a direct, commercial division. Craig Young, current CEO of MegaPath, will become executive chairman of the combined businesses; reporting to Craig will be Pat Bennett who will continue as CEO of Covad Communications, and Bruce Chatterley, current CEO of Speakeasy, who will be president of the commercial unit in charge of all non-wholesale customer sales and marketing division.