Verizon to acquire Frontier Communications in $20B all-cash deal

Verizon Communications (NYSE:VZ) on Thursday announced a deal to acquire Frontier Communications (NASDAQ:FYBR) in an all-cash transaction valued at $20B.

“This strategic acquisition of the largest pure-play fiber internet provider in the U.S. will significantly expand Verizon’s fiber footprint across the nation, accelerating the company’s delivery of premium mobility and broadband services to current and new customers,” the telecommunications company said.

Pursuant to the deal, Verizon (VZ) will acquire Frontier (FYBR) for $38.50 a share in cash, representing a premium of 43.7% to Frontier’s 90-Day volume-weighted average share price on September 3, 2024, the last trading day prior to media reports regarding a potential acquisition of Frontier.

Subject to approval by Frontier shareholders, the deal is expected to close in approximately 18 months. The transaction is expected to be accretive to Verizon’s (VZ) revenue and Adjusted EBITDA growth rates and drive significant cost synergies upon closing.

Verizon (VZ) expects to realize at least $500M in run-rate cost synergies by year three from benefits of increased scale and distribution and network integration. The deal integrates Frontier’s advanced fiber network, which encompasses 2.2M subscribers across 25 states, into Verizon’s portfolio of fiber and wireless assets, including its best-in-class Fios offering.

In addition to the deal announcement, Verizon (VZ) also reaffirmed its full-year 2024 guidance, including adjusted EPS of $4.50 to $4.70 and wireless service revenue growth of 2% to 3.5%.

Verizon (VZ) said it will continue to have a strong balance sheet and liquidity profile upon deal closure. The firm expects to maintain its capital allocation priorities and commitment towards “maintaining an industry-leading dividend and continued debt reduction.”

Shares of Frontier Communications (FYBR) fell over 9% premarket, while Verizon (VZ) was up 0.72%.