Verizon (VZ.US) is set to acquire Frontier Communications (FYBR.US) for $20 billion in cash.

Verizon(VZ.US) announced on Thursday that it will acquire Frontier Communications(FYBR.US) for $20bn in cash. Under the deal, Verizon will pay $38.50 per share in cash for Frontier, a 43.7% premium to the 90-day volume-weighted average price of Frontier as of September 3, 2024 (the last trading day before media reports of a possible acquisition of Frontier). Verizon said: "This strategic acquisition of the largest pure fiber internet provider in the US will significantly expand Verizon's fiber footprint nationwide and accelerate the company's ability to deliver high-quality mobile and broadband services to existing and new customers." The transaction is expected to close within approximately 18 months, subject to Frontier shareholder approval. The acquisition is expected to increase Verizon's revenue and adjusted EBITDA growth rate and bring significant cost synergies. Verizon expects to realize at least $500mn in operating cost synergies by the third year from the scale, distribution and network integration benefits, as well as integrating Frontier's advanced fiber network (covering 2.2mn users in 25 states) into Verizon's fiber and wireless asset portfolio, including its top-tier Fios product. In addition, Verizon reiterated its full-year 2024 expectations, expecting adjusted EPS of $4.50-$4.70 and 2%-3.5% growth in wireless service revenue. Verizon said that the company's balance sheet and liquidity position will remain strong after the transaction. The company will maintain its capital allocation priorities and is committed to "maintaining industry-leading dividend and ongoing debt reduction." Frontier's shares fell more than 9% before the market opened, while Verizon rose 0.46%.