DALLAS - Frontier Communications (OTC:FTRCQ) Parent, Inc. (NASDAQ: FYBR) announced today that its stockholders have given the green light for the company's acquisition by Verizon Communications Inc. (NYSE, NASDAQ: NYSE:VZ). In a special meeting held today, about 63% of Frontier's stockholders voted in favor of the merger agreement.
The approval follows the initial announcement on September 5, 2024, that Frontier had agreed to be acquired by Verizon in an all-cash transaction. Frontier stockholders are set to receive $38.50 per share, which is a 37% premium over the share price prior to the acquisition announcement.
Nick Jeffery, Frontier's President and CEO, commented on the stockholders' vote, stating that it reflects the strong value of the fiber business that Frontier has built. He also expressed enthusiasm about expanding their fiber offerings to more customers once the merger is completed. The transaction's closure is anticipated by the first quarter of 2026, pending certain regulatory approvals and customary closing conditions.
Frontier is recognized as the largest pure-play fiber provider in the United States, focusing on delivering high-speed broadband connectivity.
The forward-looking statements included in the announcement are subject to various risks, including the possibility that the merger may not be completed as planned or might be delayed. Factors such as regulatory approvals, competing offers, and potential changes in business conditions could impact the final outcome of the proposed transaction.
This news article is based on a press release statement from Frontier Communications Parent, Inc.
In other recent news, Frontier Communications reported a 2% revenue increase in Q2 2024, reaching $1.48 billion, along with a 5% growth in EBITDA. Despite a net loss of $123 million, the company's operational cash flow remained robust at $374 million. Frontier was awarded seven ConneCTed Communities grants by the Connecticut Department of Energy and Environmental Protection, and secured over $23 million in grants for expanding high-speed fiber broadband service in California's San Bernardino and Riverside counties. However, the company faced a stock downgrade from Raymond (NS:RYMD) James from 'Strong Buy' to 'Market Perform' due to concerns about the upcoming shareholder vote. Verizon Communications, steadfast in its commitment to expanding its Fixed Wireless Access subscriber base, maintained a Buy rating from TD Cowen following third-quarter results. Carronade Capital and Cooper Investors opposed Verizon's proposed acquisition of Frontier, arguing that the offer significantly undervalues the company. Lastly, Wolfspeed (NYSE:WOLF), Inc. nominated Thomas Seifert and Woody Young for election to its Board of Directors. These are recent developments in the companies mentioned.
InvestingPro Insights
The recent stockholder approval of Frontier Communications Parent, Inc.'s (NASDAQ: FYBR) acquisition by Verizon comes at a time when the company's financial metrics paint an interesting picture. According to InvestingPro data, Frontier's market capitalization stands at $8.65 billion, reflecting the market's valuation of the company in light of the pending acquisition.
Frontier's stock has shown remarkable performance, with a 77.59% price total return over the past year. This aligns well with the 37% premium offered by Verizon in the acquisition deal, suggesting that investors have been anticipating and pricing in the potential merger benefits.
However, it's worth noting that Frontier operates with some financial challenges. An InvestingPro Tip indicates that the company has a significant debt burden, which could have been a factor in the decision to merge with a larger entity like Verizon. Additionally, Frontier is not currently profitable, with a negative P/E ratio of -45.17, highlighting the importance of the acquisition in potentially stabilizing its financial position.
Despite these challenges, Frontier's revenue for the last twelve months as of Q3 2024 stood at $5.857 billion, with a gross profit margin of 64.38%. This robust gross margin suggests that the company's core fiber business remains strong, which likely attracted Verizon's interest.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for Frontier Communications, providing a deeper understanding of the company's financial health and market position.
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