Verizon agrees $20bn Frontier deal

November 2024 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

November 2024 Issue

As part of a programme to grow its subscriber base, US telecommunications company Verizon Communications Inc is to acquire fibre-optic internet provider Frontier Communications in an all-cash transaction valued at $20bn.

Under the terms of the definitive agreement, which has been unanimously approved by the Verizon and Frontier boards of directors, Verizon will acquire Frontier for $38.50 per share in cash.

The acquisition of Frontier, the largest pure-play fibre internet provider in the US, will significantly expand Verizon’s fibre footprint across the nation, accelerating the company’s delivery of premium mobility and broadband services to current and new customers.

The combination will also integrate Frontier’s cutting-edge fibre network into Verizon’s leading portfolio of fibre and wireless assets. In addition to Frontier’s 7.2 million fibre locations, Verizon has committed to building an additional 2.8 million fibre locations by the end of 2026.

“Connectivity is essential in nearly every part of our lives and work, and no one delivers better than Verizon,” said Hans Vestberg, chairman and chief executive of Verizon. “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.”

The acquisition of Frontier will provide Verizon with access to Frontier’s high-quality customer base in markets highly complementary to Verizon’s core northeast and mid-Atlantic markets. Frontier’s footprint offers substantial room for increased penetration in both fibre and mobility services and Verizon is well positioned with stores throughout Frontier’s territory.

“The acquisition of Frontier is a strategic fit,” continued Mr Vestberg. “It will build on Verizon’s two decades of leadership at the forefront of fibre and is an opportunity to become more competitive in more markets throughout the US, enhancing our ability to deliver premium offerings to millions more customers across a combined fibre network.”

Over approximately four years, Frontier has invested $4.1bn upgrading and expanding its fibre network, including its Build Gigabit America initiative, and now derives more than 50 percent of its revenue from fibre products.

“Less than four years ago, we set out an ambitious plan to Build Gigabit America, the digital infrastructure this country needs to thrive for generations to come,” said Nick Jeffery, president and chief executive of Frontier. “This transaction is recognition of our progress building a best in class fibre network and delivering reliable, high-speed broadband to millions of customers across the country. It is also a vote of confidence for the future of fibre.”

Acting as financial advisers to Verizon are Centerview Partners LLC and Morgan Stanley & Co LLC, with Debevoise & Plimpton LLP acting as legal counsel. PJT Partners served as financial adviser to the board of directors of Frontier and Barclays served as financial adviser. Serving as legal adviser to Frontier is Cravath, Swaine & Moore LLP, with Paul, Weiss, Rifkind, Wharton & Garrison LLP serving as legal adviser to the board of directors of Frontier.

The transaction is expected to close in approximately 18 months, subject to approval by Frontier shareholders, receipt of certain regulatory approvals and other customary closing conditions.

Mr Jeffery concluded: “I am confident that this transaction delivers a significant and certain cash premium to Frontier’s shareholders, while creating exciting new opportunities for our employees and expanding access to reliable connectivity for more Americans.”

Fraser Tennant