NEW YORK, Sept 05 (Reuters): Verizon said on Thursday it would buy Frontier Communications in an all-cash deal worth $20 billion, as the US wireless carrier looks to expand its fiber network.
Verizon has offered $38.50 per share, a premium of 37.3 per cent to Frontier's closing price on Sept. 3, a day before reports of a potential acquisition emerged. As of June 30, Frontier had a total debt of $11.25 billion.
Frontier shares, which had surged nearly 38 per cent in the previous session, fell below Verizon's offer price in premarket trading to $35.14, while Verizon climbed about 1 per cent.
The acquisition, which is expected to close in about 18 months, will help Verizon better compete against AT&T and others by enabling it to deliver premium broadband services.
Frontier has 2.2 million fiber subscribers in 25 states, which will combine with Verizon's roughly 7.4 million FiOS connections in nine states and Washington, D.C.
Verizon had in 2016 sold its TV and internet business in California, Texas, and Florida to Frontier in a $10.54 billion deal. This included a portion of its FiOS fiber networks and customers.
Verizon's fiber network is now largely in the North East and mid-Atlantic regions, while Frontier's coverage spans multiple states in the Mid West, Texas, California and others.
"The acquisition of Frontier is a strategic fit. It will build on Verizon's two decades of leadership...and is an opportunity to become more competitive in more markets throughout the US," Verizon CEO Hans Vestberg said.
The deal is expected to generate at least $500 million in annual run-rate cost savings by the third year and will add to Verizon's revenue and adjusted profit.
Verizon to buy Frontier in $20b deal to boost fibre network
FE Team | Published: September 05, 2024 23:02:06
Verizon to buy Frontier in $20b deal to boost fibre network
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