Verizon’s $9.6 billion cash takeover of Frontier Communications drew fire from key investors at Frontier, some of whom think the offer undervalues the company in itself. Frontier’s second-biggest shareholder, Glendon Capital Management, holds close to 10% and will vote against the deal, saying Verizon’s offer of $38.50 a share isn’t high enough.
With debt assumption, the deal value could reach $20 billion. Another large investor, Cerberus Capital Management, which owns 7.3%, has also privately complained it got too low a price for its holding.
The immediate concern facing a successful shareholder vote on November 13 is a majoritarian requirement for approval of the deal. Investors are uneasy about whether this will be possible. The skepticism comes despite Verizon’s strategic play to strengthen its fiber network and national broadband aspirations through the acquisition, with some questioning whether the move effectively serves Frontier’s value and growth potential.
