Shareholder Approval for Frontier-Verizon Deal
Frontier Communications shareholders have overwhelmingly approved a $9.6 billion sale to Verizon, according to an announcement made by the company on Wednesday. The deal, which was enthusiastically endorsed by Verizon CEO Hans Vestberg as a “strategic fit,” will significantly enhance Verizon’s competitive position in various markets.
Deal Details and Timeline
Verizon has agreed to pay $38.50 per share for Frontier and assume approximately $10 billion of the company’s debt. The closing of the deal is anticipated to take 18 months. When the transaction was initially announced in September 2022, it represented a 44% premium over Frontier’s 90-day volume-weighted average share price.
Shareholder Concerns and Recommendations
Despite the significant premium offered by Verizon, a number of large shareholders expressed concerns about the proposed price. They argued that Verizon should be prepared to offer a more generous compensation package and signaled their intention to vote against the deal. Proxy advisory firms Institutional Shareholder Services and Glass Lewis, recognizing the potential for a higher bid, recommended that Frontier investors abstain from voting, effectively delaying the deal’s approval to allow for further consideration of options.
Jana Partners and the Genesis of the Deal
Verizon’s interest in acquiring Frontier can be traced back to Jana Partners, an activist investment firm. Almost a year before the deal’s announcement, Jana Partners disclosed a substantial stake in Frontier and publicly advocated for the company’s sale. This pressure from Jana Partners laid the groundwork for the subsequent negotiations and ultimately the agreement between Frontier and Verizon.
Verizon’s Competitive Advantage
The acquisition of Frontier aligns with Verizon’s strategic objective of bolstering its position in the telecommunications industry. The deal will allow Verizon to compete more effectively against rivals AT&T and T-Mobile, which have been aggressively expanding their offerings to include unlimited plans and bundled options.
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