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Key Points
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Shares of Frontier Communications fell Thursday after Verizon Communications announced plans to buy the fiber-optic networking company.
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The transaction represents an enterprise value of approximately $20 billion.
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Verizon is offering Frontier shareholders $38.50 per share in cash, a 44% premium over Frontier’s 90-day volume-weighted average stock price on Tuesday.
Shares of Frontier Communications (FYBR) fell Thursday after Verizon Communications’ (VZ) said it plans to buy the fiber-optic networking company for $20 billion in cash.
Verizon said the deal will expand its fiber network and is expected to be “positively impactful to revenue and adjusted EBITDA growth” once the deal closes.
“The acquisition of Frontier is a strategic fit,” said Hans Vestberg, chairman and CEO of Verizon. “It builds on Verizon’s two decades of leadership at the forefront of fiber and is an opportunity to become more competitive in more markets across the United States.”
Frontier shares jumped 38% on Wednesday amid reports of a pending deal, but were down about 9% Thursday morning, trading below Verizon’s final offer price. The drop may reflect some uncertainty among investors over regulatory approval for the deal. Verizon shares were little changed, down less than 1%.
Verizon offers $38.50 per Frontier share
Verizon is offering Frontier shareholders $38.50 per share in cash, a 44% premium over Frontier’s 90-day volume-weighted average share price on Tuesday, the day before The Wall Street Journal reported that a deal had been closed.
The transaction has been unanimously approved by both boards and is expected to close in approximately 18 months, Verizon said, subject to Frontier shareholders’ approval and regulatory approval.
Update: This article has been updated with more recent price information.
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