Investing.com -- Verizon (NYSE:VZ ) confirmed its $20 billion acquisition of Frontier Communications (OTC:FTRCQ ) in a press release on Thursday, marking a major move in the telecommunications industry.
The company believes the $38.50 per share all-cash transaction will significantly expand its fiber network, extending its reach to 25 million premises across 31 states, including Washington, D.C.
Frontier shares are down around 8.5% premarket following the news.
The deal represents a 43.7% premium to Frontier's 90-day volume-weighted average share price (VWAP) on September 3, 2024, the day before media reports regarding a potential acquisition of Frontier.
Furthermore, the acquisition brings 2.2 million Frontier fiber subscribers into Verizon's fold, improving its ability to deliver broadband and mobility services.
Frontier, known for its strong fiber network, has been a strong player in the fiber internet space, with over 50% of its revenue generated from fiber products.
Verizon, which already boasts 7.4 million Fios connections, will see its fiber customer base grow substantially.
Verizon's CEO, Hans Vestberg, emphasized the strategic value of the deal, noting that it builds on the company's two decades of leadership in fiber.
"Verizon offers more choice, flexibility and value, and we continuously look for ways to provide the best product and network experience to our customers as we bolster our position as the provider of choice," he stated.
The merger is expected to bring $500 million in annual cost synergies and boost Verizon's revenue and Adjusted EBITDA growth. The deal, approved by both companies' boards, will close in approximately 18 months, pending regulatory and shareholder approvals.
Frontier CEO Nick Jeffery called the move a "vote of confidence" for the future of fiber, highlighting the company's progress in building a best-in-class network.
In the press release, Verizon also reaffirmed its full-year guidance, expecting total wireless service revenue growth of 2% to 3.5%, adjusted EBITDA growth of 1% to 3% and adjusted EPS of $4.50 to $4.70.
Source: Investing.com