Verizon agrees to buy Frontier for $9.6 billion in cash

Verizon Communications Inc. agreed to buy rival telecom operator Frontier Communications Parent Inc. for about $9.59 billion in cash, as the New York phone giant looks for ways to improve its high-speed Internet offerings.

Frontier investors will receive $38.50 per share, a 37% premium to the $28.04 closing price on Tuesday, the day before news of the pending deal broke, Verizon said in a statement Thursday. The transaction values ​​the Dallas-based company at $20 billion, including debt.

Frontier, which emerged from bankruptcy in 2021, calls itself “America’s largest fiber-optic internet company.” Telecom companies such as Verizon are ramping up their fiber assets to add capacity for customers’ growing data usage. The flow of data is expected to grow even more as more companies adopt artificial intelligence. In July, T-Mobile US Inc. said it would invest $4.9 billion in a joint venture with private equity firm KKR & Co. to buy fiber-optic internet service provider Metronet.

Frontier shares fell 9.2% in premarket trading in New York. The Dallas-based company’s stock had gained 38% to $38.68 on Wednesday after the Wall Street Journal first reported the talks. Verizon shares had fallen 3.4% in New York on Wednesday to $41.48.

The boards of directors of Verizon and Frontier have approved the deal, which is expected to close in about 18 months if shareholders and regulators agree. Verizon also reaffirmed its full-year outlook in the statement.

Frontier began an internal review of its business earlier this year. The company has faced pressure from activist investor Jana Partners to improve its performance. It reported sales of $5.8 billion in 2023, with about 52% of total revenue coming from activities related to its fiber optic products.

In 2015, Verizon sold parts of its wireline business in California, Florida and Texas to Frontier for $10.54 billion.