Little Rock, Ark.-based Windstream Corp. has entered into a definitive agreement to acquire Newton-based Iowa Telecommunications Services Inc. for $1.1 billion, the company announced today. The transaction is expected to close in mid-2010.

Iowa Telecom provides communications services to residential and business customers in Iowa and Minnesota and has approximately 256,000 access lines, 95,000 high-speed Internet customers and about 26,000 digital TV customers.

The transaction also includes Iowa Telecom’s 15 Federal Communications Commission advanced wireless service licenses and three 700 MHz band licenses.

“This is an excellent transaction for our shareholders, and for the customers that we serve,” said Alan Wells, Iowa Telecom chairman and CEO, in a press release. “Windstream is a leader in our industry, and Jeff Gardner (president of Windstream) and his team have done an outstanding job of profitably growing their business in challenging times. Windstream shares our commitment to both customer service and shareholder value, and we’re very pleased that our company will be joining the Windstream organization.”

According to terms of the agreement, Iowa Telecom shareholders will receive 0.804 share of Windstream stock and $7.90 in cash for each Iowa Telecom share. Windstream expects to issue approximately 26.5 million shares at a total value of $269 million, or $10.15 per share.

Wells will join Windstream’s board of directors.

“These are well-run, profitable properties in very rural service areas that expand our presence in the Upper Midwest and grow our free cash flow per share,” Gardner said in a release. “I also am pleased to have (Wells) join our company’s board of directors. His financial acumen and executive management experience will be a tremendous asset.”

Windstream will repay an estimated net debt of $598 million and will finance the cash portion of the transaction and the repayment of Iowa Telecom’s outstanding indebtness with the proceeds from a debt financing or additional bank borrowings.

Iowa Telecom has approximately 800 employees, including 350 at its corporate headquarters in Newton. Windstream said it will maintain an operating presence in Newton and plans to expand the existing call center there.