Verizon announced Thursday that it has agreed to acquire Frontier Communications. The $9.6 billion all-cash transaction is valued by the companies at $20 billion when it includes Verizon’s assumption of Frontier debt.
Over the past four years Dallas-based Frontier has spent more than $4.1 billion upgrading its fiber network which currently includes more than 2.2 million subscribers across 25 states, deriving more than 50 percent of its revenue from fiber products. The Frontier network will now be folded into Verizon’s base of 7.4 million connections in 9 states and Washington, D.C.
Verizon said the deal, once closed, could provide as much $500 million in run-rate synergies.
“Less than four years ago, we set out an ambitious plan to Build Gigabit America, the digital infrastructure this country needs to thrive for generations to come,” said Nick Jeffery, president and CEO of Frontier.
“I am confident that this delivers a significant and certain cash premium to Frontier’s shareholders, while creating exciting new opportunities for our employees and expanding access to reliable connectivity for more Americans.”
The acquisition will expand the Verizon fiber network geographically from its core Northeast and Mid-Atlantic markets to include markets in Florida, California and Texas, three states the provided Frontier with a boost in market share when they purchased the systems in 2016 — from Verizon.
The company’s rapid and expensive expansion proved costly to Frontier, then-headquartered in Norwalk, Conn. The company filed for bankruptcy protection in 2020, citing more than $10 billion in debt.
Under the terms of the agreement, Verizon will acquire Frontier for $38.50 per share in cash, representing a premium of 43.7% to Frontier’s 90-Day volume-weighted average share price on Sept. 3, the last trading day prior to media reports regarding the potential acquisition. Frontier opened on Sept. 3 at $28.29.
The transaction is expected to close in approximately 18 months, subject to approval by Frontier shareholders regulatory authorities.
Centerview Partners and Morgan Stanley & Co. acted as financial advisors to Verizon and Debevoise & Plimpton acted as legal counsel.
PJT Partners served as financial advisor to the strategic review committee of Frontier’s board of directors, and Barclays served as financial advisor to Frontier. Skadden & Arps advised PJT.
Cravath, Swaine & Moore served as legal advisor to Frontier, and Paul, Weiss, Rifkind, Wharton & Garrison served as legal advisor to the company’s strategic review committee.
Mark Nielsen is Frontier’s EVP, chief legal & regulatory officer. Before coming to Frontier in 2014, he was vice president and associate general counsel for Raytheon.