By Adriano Marchese
Frontier Communications said that premium Verizon Communications' offer is the best option for stockholders and recommends they vote for the transaction.
The recommendation was made by the company's majority-independent strategic review committee and the board which, alongside a possible sale, explored other alternatives such as joint ventures and remaining independent to pursue its standalone plan.
On Friday, the communication and technology services company said Verizon's all-cash offer of $38.50 a share represents a 37% premium to Frontier's pre-announcement price and a significant premium to all other measures of Frontier's historical stock performance.
"The all-cash consideration provides certainty of value and immediate liquidity to Frontier stockholders at close," the company said.
Verizon agreed in September to acquire Frontier in a deal that values the company at about $20 billion, including debt.
The two companies will need the approval of their shareholders if they want to close the transaction in the 18-month timeframe they laid out then.
Not all investors are on board with the deal. Glendon Capital Management, Frontier's second largest investor, sent a letter to Frontier's board on Wednesday saying the $38.50 per-share acquisition price offered by Verizon significantly undervalues the telecommunications company's assets and earnings trajectory.
Cooper Investors, a smaller investor in the company, also said it believes the deal price is too low and that it would vote against the transaction.
But Frontier said the price exceeded nearly all analyst price targets for Frontier prior to the deal, and that moreover, the acquisition circumvents potential risks and more negative aspects of its standalone plan, including negative cash flows through 2027 as it takes on more debt to build out its fiber network and operating in an intensely competitive industry.
Write to Adriano Marchese at adriano.marchese@wsj.com
(END) Dow Jones Newswires
10-25-24 0949ET