Frontier Communications Parent, Inc. (NASDAQ:FYBR) shares are trading lower after the company signed an acquisition agreement with Verizon Communications Inc. (NYSE: VZ).
Under the terms of the deal, Verizon will acquire Frontier in an all-cash deal valued at $20 billion.
Specifically, Verizon will acquire Frontier for $38.50 per share in cash, a 43.7% premium to Frontier’s 90-day volume weighted average price (VWAP) as of September 3, 2024.
Also read: Verizon wins $4M federal contract, offers new security infrastructure
The acquisition will integrate Frontier’s advanced fiber network with Verizon’s extensive fiber and wireless assets, including Fios. Frontier’s 2.2 million fiber subscribers and 7.2 million connection points will join Verizon’s 7.4 million Fios connections.
This strategic acquisition, involving the largest pure-play fiber internet provider in the United States, will significantly enhance Verizon’s nationwide fiber footprint, boost its delivery of premium broadband and mobility services, and expand its intelligent edge network for digital innovations like AI and IoT.
Frontier has invested $4.1 billion in its fiber network over the past four years and plans to expand it by an additional 2.8 million fiber locations by 2026.
The transaction received unanimous approval from the boards of directors of Verizon and Frontier.
The deal is expected to close in approximately 18 months, subject to Frontier shareholder approval, regulatory approvals and other customary closing conditions.
Synergies:The transaction is expected to boost Verizon’s revenue and adjusted EBITDA growth rates once closed.
Verizon expects to achieve at least $500 million in annual cost synergies through increased scale, distribution and network integration by year three.
Perspectives:Verizon reaffirmed its FY24 guidance for wireless revenue growth of 2.0% to 3.5%, adjusted EBITDA growth of 1.0% to 3.0% and adjusted EPS of $4.50 to $4.70 (up from $4.57).
The company reiterated capital expenditure guidance of $17.0 billion to $17.5 billion for FY24.
Investors can gain exposure to the stock via Invesco S&P 500 Equal Weight Communication Services ETF (NYSE:RSPC) and SPDR S&P Telecom Exchange Traded Fund (NYSE: XTL).
Price action:FYBR shares are down 9.72% at $34.92 before the market open Thursday. VZ shares are up 1.21% at $41.98.
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This item Verizon to Acquire Frontier for $20 Billion, Reaffirms Fiscal 2024 Outlook originally appeared on Benzinga.com
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