Concerns are mounting among major shareholders regarding Verizon Communications’ (VZ.N) proposed $9.6 billion acquisition of Frontier Communications (FYBR.O). Glendon Capital Management, Frontier’s second-largest investor, which holds nearly 10% of the company, plans to vote against the deal, citing the $38.50 per share offer as inadequate, according to three sources familiar with the firm’s intentions.
When accounting for acquired debt, the overall value of the transaction climbs to $20 billion. The firm is poised to oppose the acquisition when it is presented for a shareholder vote on November 13, where a majority of outstanding shares must approve the deal for it to proceed.
In addition, Cerberus Capital Management, which owns a 7.3% stake in Frontier, has privately indicated that it views Verizon’s purchase price as significantly undervaluing the company. The firm’s voting intentions remain unclear, as a spokesman for Cerberus declined to comment.
Both Verizon and Frontier did not respond immediately to requests for comment, and the sources spoke on the condition of anonymity due to the sensitivity of the discussions.
The proposed acquisition was announced last month and is positioned as a strategic move, representing a 44% premium over Frontier’s 90-day volume-weighted average share price. Verizon CEO Hans Vestberg characterized the acquisition as “a strategic fit” that would enhance the company’s competitiveness across various markets. Management anticipates that the deal could take approximately 18 months to finalize.
The skepticism from investors coincides with remarks from several research analysts who believe Verizon’s offer is too low and advise waiting, as Frontier’s assets are expected to appreciate over time. New Street Research analyst Jonathan Chaplin stated in a recent report that investors should reject the deal unless a higher price is offered, suggesting that Verizon could afford to pay at least $67 per share while still creating value for its shareholders.
Ares Management, the largest stakeholder in Frontier with a 15.6% ownership, has also opted not to disclose its stance on the proposed price or how it may vote in the upcoming decision.
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