Despite concerns raised by some stockholders, 63% of Frontier's shareholders voted for Verizon's proposed acquisition for $38.50 per share. The deal, which aids Verizon's convergence strategy, is expected to close by Q1 2026.
It was not clear sailing, but Frontier Communications announced Wednesday that its stockholders have approved Verizon Communications' proposal to acquire the company for $38.50 per share.
Frontier said approximately 63% of stockholders voted for the merger agreement at a special meeting held earlier today, with ten of the company's top twelve stockholders voting for Verizon's $20 billion offer, comprising $10.4 billion of debt and $9.6 billion of cash.
Frontier needed more than 50% of stockholders to vote for the deal. Frontier, which pressed shareholders to approve Verizon's offer, said last week that it would focus on its standalone plan, which includes a fiber network buildout to 10 million locations, if the deal was voted down.
Frontier faced some static from shareholders during this process. A subset of shareholders, along with certain analysts, argued that Verizon's offer of $38.50 per share undervalued Frontier. Additionally, a pair of proxy advisers – Institutional Shareholder Services (ISS) and Glass Lewis – recommended that shareholders abstain, which would effectively be a vote against the proposal.
However, Verizon made it clear heading into the vote that it would not sweeten its bid.
"We were asked for a best and final. We gave the best and final," Verizon CEO Hans Vestberg said late last month. "We're going to see what's going to happen, but we feel really confident that this is fair and good for all stakeholders."
With shareholder approval salted away, the deal is expected to close by the first quarter of 2026. New Street Research policy analyst Blair Levin previously suggested the deal has a "strong chance" of obtaining the required antitrust and regulatory approvals and that the recent election won't impact the outcome.
"Today's vote demonstrates the strong value of the fiber business we have built over the past four years and our ability to expand access to reliable connectivity for more Americans," Frontier President and CEO Nick Jeffery said in a statement. Jeffery, the former CEO of Vodafone UK who took the reins of Frontier on March 1, 2021, has been leading a turnaround since the company exited bankruptcy on April 30, 2021.
The urge to converge
Verizon believes the acquisition will help to fuel its convergence strategy and deliver "owners economics" across its wireline and wireless networks. Verizon has made it clear that it will add mobile to the bundle after it clinches the Frontier acquisition, arguing that Frontier will need a home broadband/mobile combo in order to compete against cable.
The acquisition is poised to provide Verizon with a total of 2.2 million subscribers and a fiber network that reaches 25 million premises across 31 states and Washington, DC. When combined with Verizon's existing footprint, here's how the combined footprint will look:
(Source: Verizon)
New Street Research analyst Jonathan Chaplin was among the analysts who believed Verizon's offer undervalued Frontier, but he acknowledged that shareholders will still come out ahead.
"While we think Frontier should have received more, we recognize that most large shareholders will lock in a very substantial gain while removing uncertainty with this transaction," Chaplin said in a brief note following word that Frontier shareholders approved the deal. "This is a strong win for Verizon, who will secure a great asset at a great price."
Frontier shares were up 65 cents (1.92%) to $34.81 in Wednesday morning trading. Verizon shares were up 54 cents (+1.33%) to $40.94.
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