Verizon To Buy Frontier In $20 Bln Cash Deal; Backs FY24 Outlook; Frontier Stock Down In Pre-market

(RTTNews) - Verizon Communications Inc. (VZ) announced Thursday a definitive agreement to acquire Frontier Communications Parent Inc. (FYBR) in an all-cash transaction valued at $20 billion.

In pre-market activity on the Nasdaq, Frontier shares were losing around 10 percent to trade at $35.00. Frontier shares closed around 38 percent higher on Wednesday's regular trading after the Wall Street Journal reported that Verizon was in advanced talks to acquire Frontier.

Further, Verizon reaffirmed its fiscal 2024 outlook, still expecting adjusted earnings per share of $4.50 to $4.70, adjusted EBITDA growth of 1.0 percent to 3.0 percent, and total wireless service revenue growth of 2.0 percent to 3.5 percent.

Analysts on average expect the company to report earnings of $4.57 per share for the year, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

Under the deal terms, Verizon will acquire Frontier for $38.50 per share in cash, representing a premium of 43.7% to Frontier's 90-Day volume-weighted average share price on September 3, the last trading day prior to media reports regarding a potential acquisition of Frontier.

Verizon said the acquisition of Frontier is expected to be accretive to its revenue and adjusted EBITDA growth rates upon closing.

The transaction has been unanimously approved by the Verizon and Frontier Boards of Directors. The deal is expected to close in around 18 months, subject to approval by Frontier shareholders, receipt of certain regulatory approvals and other customary closing conditions.

Verizon further expects to realize at least $500 million in run-rate cost synergies by year three from benefits of increased scale and distribution and network integration.

Verizon noted that the acquisition of the largest pure-play fiber internet provider in the U.S. will significantly expand its fiber fiber network to accelerate offering of premium broadband and mobility services to more customers. It will also expand Verizon's intelligent edge network for digital innovations like AI and IoT.

The deal will extend Verizon's network reach to 25 million premises across 31 states and Washington, D.C.