Verizon Communications‘ (NYSE: VZ) major news on Wednesday was entirely expected. Still, it helped push the company’s stock into positive territory. Verizon’s shares closed the trading session nearly 2% in response, providing a positive contrast to the flatlining S&P 500 index.
In this month of high-profile elections, Verizon’s news had to do with a shareholder vote. Frontier Communications Parent (NASDAQ: FYBR) investors were polled in a special shareholders meeting to either accept or reject Verizon’s buyout of their company. They voted in favor of the move; in a press release on the subject, Frontier said that around 63% of respondents opted for “yes.”
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This advances the takeover, which was first announced to the public in early September. Verizon and Frontier agreed that the former would acquire the latter in an all-cash, $20 billion deal.
Verizon’s goal in buying Frontier is to be the new owner of its fiber network assets. In the original press release trumpeting the arrangement, Verizon wrote, “This strategic acquisition of the largest pure-play fiber internet provider in the U.S. will significantly expand Verizon’s fiber footprint across the nation, accelerating the company’s delivery of premium mobility and broadband services to current and new customers.“
The acquirer added that owning Frontier is expected to increase both its revenue and non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) following the close of the deal. It did not provide any financial estimates.
Regardless, as is typical in such situations, Verizon shareholders are happy to hear that a (hopefully) beneficial deal has been accepted by investors of the other party. Frontier is a big swallow, however, and Verizon will be on the hook to integrate it relatively smoothly into its existing operations.
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