Frontier to Buy Verizon Lines for $5.3 Billion
5/13/09Moving to sharpen its focus on the wireless and broadband businesses, Verizon Communications said Wednesday it would spin off wireline operations spanning 14 states and merge them with Frontier Communications for $5.3 billion in stock.
The proposed deal covers 4.8 million access lines in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin, as well as some in California, Verizon said.
“This transaction is an attractive way to add value through a special distribution to our shareholders,” Ivan Seidenberg, Verizon’s chairman and chief executive officer, said Wednesday in a statement announcing the spinoff.
“Longer term, this transaction is part of our multiyear effort to transform our growth profile and asset base to focus on wireless, FiOS fiber-optic services and other broadband development, and global IP,” he said.
As part of the spinoff, Verizon’s shareholders will receive stock in Frontier giving them a stake of about 68 percent in the combined company. Exact terms of the exchange will depend on where Frontier’s shares are trading shortly before the deal closes, subject to limits in the form of a “collar.”
Maggie Wilderotter, Frontier’s chairman and chief executive, called Wednesday’s deal a “transformational transaction.”
“We are confident that we can dramatically accelerate the penetration of broadband in these new markets during the first 18 months,” she said in a company statement.
The boards of directors of both companies have approved the transaction, which is expected to close in 12 months, Frontier said.
Verizon said the spinoff would also deliver value of about $3.3 billion through cash and debt that Verizon would receive before the spinoff, as well as debt issued by Verizon subsidiaries that Frontier would assume. Including debt, the deal has a value of about $8.6 billion.
Verizon’s advisers in the transactions were Barclays Capital and JPMorgan Securities. Citigroup and Evercore Partners acted as financial advisers to Frontier, and Cravath, Swaine & Moore was Frontier’s legal adviser.
Go to Verizon Press Release via PRNewswire » Go to Frontier Press Release »
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