Verizon to Acquire Frontier Communications in $20 Billion Deal

Shares of Frontier Communications (FYBR) are tumbling 10% in premarket trading after Verizon Communications (VZ) announced its plans to acquire the fiber network company for $20 billion in cash.

Verizon’s Expansion and Strategic Fit

Verizon stated that the acquisition of Frontier is a strategic fit and will expand its fiber network. The deal is expected to be accretive to revenue and adjusted EBITDA growth once it closes. Verizon Chairman and Chief Executive Officer (CEO) Hans Vestberg said, “It will build on Verizon’s two decades of leadership at the forefront of fiber and is an opportunity to become more competitive in more markets throughout the United States.”

Verizon Offers $38.50 Per Frontier Share

As part of the deal, Verizon is offering Frontier shareholders $38.50 per share in cash, which represents a 44% premium to Frontier’s 90-day volume-weighted average share price on Tuesday, the day before The Wall Street Journal reported that a deal was close.

The transaction has been unanimously approved by both boards and is expected to close in around 18 months, subject to the approval of Frontier’s shareholders and regulatory authorities.

Frontier shares surged 38% to close at $38.68 on Wednesday, higher than the offer price. Meanwhile, Verizon shares are rising 1% ahead of the opening bell on Thursday.

Conclusion

The acquisition of Frontier Communications by Verizon Communications for $20 billion in cash marks a significant move in the telecom industry. Verizon’s expansion of its fiber network through this deal is expected to enhance its competitiveness in various markets across the United States. The transaction, which offers Frontier shareholders a 44% premium to the company’s average share price, has been unanimously approved by both boards and is anticipated to close in approximately 18 months, pending regulatory approvals and shareholder consent.

For more information, read the original article on Investopedia.