Verizon Spins Off Landline Biz
Frontier Communications will acquire Verizon’s access lines and businesses in 14 states for $8.6 billion in cash and stock.
May 13, 2009
Verizon Communications Inc. said on Wednesday that it would sell 4.8 million access lines in 14 states. The buyer, Frontier Communications Inc. will purchase Verizon’s landline business in these states for about $8.6 billion in cash and stock.
The purchase price includes $5.3 billion of Frontier common stock that will be paid to Verizon shareholders, in addition to about $3.3 billion in value through a combination of cash, debt securities and assumption of debt. The transaction is part of Verizon’s strategy of re-focus its business on broadband and wireless access, away from providing traditional landline services.
The wireless company said in a statement Tuesday that about 11,000 of its employees would continue employment at Frontier after the merger. Between 1993 and 2000, Frontier made a string of acquisitions of Verizon’s landline assets.
Frontier chairman and chief executive Maggie Wilderotter said the company plans to “dramatically accelerate the penetration of broadband in these new markets.” The companies hope to complete close of the acquisition in under a year.
The states that Verizon will divest of its landline businesses are Arizona, California, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, Wisconsin and West Virginia.
Frontier used Citi and Evercore Partners as its financial advisors, and Cravath, Swaine & Moore LLP as legal advisor in the transaction. Robert I. Townsend led Cravath's legal team for the deal. Verizon used Barclays Capital Inc. and JP Morgan Securities as its financial advisors, and Debevoise & Plimpton LLP as legal advisor in the transaction. Jeffrey Rosen and Kevin Schmidt led the team for Debevoise.
Verizon closed Wednesday at $29.77 per share.
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