By Dean Seal


Frontier Communications' second largest investor is the latest stakeholder to come out against the company's proposed $9.6 billion acquisition by Verizon Communications.

Glendon Capital Management 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.

"We recognize the strategic merits of combining with a U.S. wireless carrier as the telecommunications industry continues to converge, but we believe a sale at this price does not adequately capture Frontier's progress and momentum," Glendon said in its letter.

The firm, which owns almost 10% of Frontier's outstanding shares, is calling on the board to push back the Nov. 13 shareholder vote on the acquisition so that investors can "understand the standalone case for the company."

Verizon agreed in September to acquire Frontier in a deal that values the company at about $20 billion including debt. The two companies said at the time that they expected the transaction to close in about 18 months, subject to approval from shareholders and regulators.

Cooper Investors, a smaller Frontier investor, said earlier this month that it also believes the deal price is too low and that it would vote against the transaction.

Glendon was initially a holder of Frontier's debt during its Chapter 11 proceedings and became one of the company's top investors following its emergence from bankruptcy in 2021.

The firm now contends that the enterprise value of Frontier is at least $26 billion, which is 30% higher than the $20 billion ascribed by the Verizon transaction. Glendon said the board and its strategic review committee largely relied on analyses in their valuation process that were "fundamentally flawed."


Write to Dean Seal at dean.seal@wsj.com


(END) Dow Jones Newswires

10-23-24 1029ET