Frontier Communications (OTC:FTRCQ) Parent, Inc. (NASDAQ:FYBR) announced that its shareholders have overwhelmingly approved a merger agreement with Verizon Communications Inc. (NYSE:NYSE:VZ), a significant step in the process of becoming a wholly owned subsidiary of the telecommunications giant.
At a virtual special meeting held on Wednesday, approximately 91% of the outstanding shares of Frontier Communications were represented, and a majority voted in favor of the merger agreement. Specifically, 157,274,040 shares voted for the agreement, 47,587,235 shares voted against, and 21,604,161 shares abstained from voting.
In addition to the merger agreement proposal, shareholders also cast advisory votes on executive compensation related to the merger. The compensation package was approved with 158,907,153 votes in favor, 64,408,428 against, and 3,149,855 abstentions.
The merger, first announced on September 4, 2024, is set to position Frontier as a subsidiary of Verizon, further consolidating the telecommunications industry. The approval of the merger by Frontier's shareholders marks a critical milestone in the ongoing process of the merger, which is subject to regulatory approvals and customary closing conditions.
Frontier, headquartered in Dallas, Texas, has been a key player in the telecommunications sector, providing services predominantly in rural areas and smaller communities. The merger with Verizon, one of the largest communication technology companies in the world, is expected to expand the reach and capabilities of both companies.
In other recent news, Frontier Communications' shareholders have approved the company's acquisition by Verizon Communications. The approval comes after Frontier reported a 2% revenue increase in Q2 2024, reaching $1.48 billion, alongside a 5% growth in EBITDA. However, the company faced a stock downgrade from Raymond (NS:RYMD) James due to concerns about the shareholder vote. This comes amidst opposition from Carronade Capital and Cooper Investors, who argue that Verizon's offer undervalues Frontier.
In addition, Frontier was awarded seven ConneCTed Communities grants and secured over $23 million in grants to expand high-speed fiber broadband service in Connecticut, San Bernardino, and Riverside counties. Meanwhile, Verizon Communications maintained a Buy rating from TD Cowen following third-quarter results.
InvestingPro Insights
As Frontier Communications Parent, Inc. (NASDAQ:FYBR) moves forward with its merger with Verizon, investors should consider some key financial metrics and insights provided by InvestingPro. Despite the overwhelming shareholder approval for the merger, FYBR's financial health presents a mixed picture.
InvestingPro data shows that FYBR has a market capitalization of $8.65 billion and has demonstrated strong price performance, with a 67.16% total return over the past year. This aligns with the InvestingPro Tip highlighting FYBR's "Strong return over the last three months" and "Large price uptick over the last six months."
However, investors should be cautious. An InvestingPro Tip warns that FYBR "Operates with a significant debt burden" and that "Short term obligations exceed liquid assets." This financial situation could potentially impact the merger process or the company's post-merger integration with Verizon.
Additionally, FYBR's profitability is a concern. The company's P/E ratio stands at -45.95, and an InvestingPro Tip indicates that analysts "do not anticipate the company will be profitable this year." This information may be particularly relevant for shareholders considering the approved executive compensation package related to the merger.
For a more comprehensive analysis, InvestingPro offers 9 additional tips for FYBR, providing deeper insights into the company's financial position and prospects as it prepares to become a subsidiary of Verizon.
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