(Bloomberg) — Verizon Communications Inc. agreed to buy rival telecommunications operator Frontier Communications Parent Inc. for an enterprise value of $20 billion, according to a joint press release from the companies.
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Investors will get $38.50 a share in cash, a 37% premium to the $28.04 closing price on Tuesday, the day before news of a pending deal came out. Frontier also has about $11 billion in debt.
The deal will help the New York-based wireless phone giant accelerate its plans to offer high-speed internet service more widely. Internet usage continues to grow, with more people streaming video. The flow of data is expected to grow even further as more companies adopt artificial intelligence for their business.
Dallas-based Frontier bills itself as the “largest pure-play fiber internet company in the US.” It reported sales of $5.8 billion in 2023, with about 52% of total revenue from activities related to its fiber-optic products.
In 2015, Verizon sold parts of its landline phone business in California, Florida and Texas to Frontier for $10.54 billion in cash. Frontier later declared bankruptcy, emerging in 2021 with about $11 billion less debt.
Frontier initiated an internal review of its business earlier this year. The company has faced pressure from activist investor Jana Partners to improve its returns.
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