By Drew FitzGerald and Lauren Thomas
Frontier Communications shareholders approved a $9.6 billion sale to Verizon Communications, thwarting a campaign led by some disgruntled investors to seek a higher price.
The transaction, which awaits regulatory approval, would expand Verizon's fiber network to a size that would rival major competitors like AT&T and Comcast by adding back lines in states such as California and Texas.
Most merger votes are formalities, especially when they offer shareholders a hefty premium, but some Frontier investors had voiced displeasure with the deal.
In the end, about 63% of stockholders ended up approving the all-cash takeover, according to Frontier. The broadband provider said 10 of its top 12 shareholders approved the transaction.
Proxy advisers Institutional Shareholder Services and Glass Lewis earlier this month advised their clients to abstain -- which counts the same as a no vote -- to provide investors more time to mull the transaction.
Verizon is paying $38.50 a share to Frontier holders and is set to absorb about $10 billion of Frontier's debt. The merger is expected to close in the first quarter of 2026.
Frontier serves more than two million fiber-optic connections across 25 states, including California, Texas and Florida -- three markets that Verizon sold to it in 2016. The internet provider filed for bankruptcy protection in April 2020 and emerged a year later with private-equity firms Cerberus Capital Management and Ares Management as major shareholders.
Telecom companies are rushing to snap up new fiber-optic broadband markets to gain a foothold in a business with long-lasting returns. But the high cost of building new fiber lines deters potential suitors.
Verizon topped one other bidder for Frontier, according to a securities filing. The runner-up was Canadian telecom company BCE, according to people familiar with the matter.
BCE later struck a smaller deal to buy Ziply Fiber, a broadband company with operations in the U.S. Northwest, for about 5 billion Canadian dollars in cash, equivalent to about $3.6 billion.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Lauren Thomas at lauren.thomas@wsj.com
(END) Dow Jones Newswires
November 13, 2024 11:32 ET (16:32 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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