(Bloomberg) — Verizon Communications Inc. agreed to buy rival telecommunications carrier Frontier Communications Parent Inc. for an enterprise value of $20 billion, according to a joint news release from the companies.
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Investors will receive $38.50 per share in cash, a 37% premium to Tuesday’s closing price of $28.04, the day before news of a pending deal broke. 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 further as more companies use artificial intelligence for their operations.
Dallas-based Frontier bills itself as the “largest pure fiber Internet company in the United States.” It reported sales of $5.8 billion by 2023, with approximately 52% of total revenue from activities related to its fiber optic products.
In 2015, Verizon sold parts of its landline operations 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 began an internal review of its operations earlier this year. The company has faced pressure from activist investor Jana Partners to improve its returns.
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