Verizon said on Thursday it would buy Frontier Communications in an all-cash deal valued at $20 billion, as the U.S. wireless carrier looks to boost its fiber network.
Shares of Frontier Communications fell more than 9% in premarket trading.
Verizon climbed about 1%.
Verizon has offered $38.50 per Frontier share held, a premium of 37.3% to Frontier’s closing price on Sept. 3, before reports of a potential acquisition emerged.
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 to existing as well as new customers.
Frontier has 2.2 million fiber subscribers across 25 states, which will combine with Verizon’s about 7.4 million Fios connections in nine states and Washington, D.C. Verizon’s fiber network is 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 United States,” Verizon CEO Hans Vestberg said in a statement.
The deal is projected to generate at least $500 million in annual run-rate cost synergies, and will add to Verizon’s revenue and adjusted earnings before interest, tax, depreciation, and amortization growth upon closing.
Frontier Communications is set to be acquired by Verizon for $20 billion in cash and stock on Thursday. S. cellular carrier seeks to expand its fiber infrastructure.
In premarket trading, Frontier Communications’ shares dropped by more than 9%. The Verizon stock increased by roughly 1%.
A premium of 37.3% over Frontier’s closing price on September, Verizon has offered $38.50 per share of Frontier that is held. 3. prior to rumors of a possible purchase starting to circulate.
With the ability to offer premium broadband services to both current and potential customers, Verizon will be able to more effectively compete against AT&T and other competitors thanks to the acquisition, which is anticipated to close in around 18 months.
Verizon will combine its roughly 74 million Fios connections in nine states and Washington, D.C. with Frontier’s 22 million fiber subscribers spread across 25 states. C. .
The majority of Verizon’s fiber network is located in the Northeast and mid-Atlantic regions, whereas Frontier’s coverage includes several Midwestern, Texas, California, and other states.
“It makes strategic sense to acquire Frontier. In a statement, Verizon CEO Hans Vestberg stated, “It will build on Verizon’s two decades of leadership… and is an opportunity to become more competitive in more markets throughout the United States.”.
Verizon’s revenue and adjusted earnings before interest, tax, depreciation, and amortization growth will be increased by the deal, which is expected to create at least $500 million in annual run-rate cost synergies at closing.
