Frontier Communications Inc
The deal consolidates Frontier's position among rural phone providers, many of whom are struggling with falling access line revenue, even as it helps Verizon focus on its faster-growing wireless and broadband services.
With more than 7 million access lines in 27 states, we will be the largest pure rural communications provider of voice, broadband and video services in the U.S., Frontier Chief Executive Maggie Wilderotter said in a statement.
Under the deal, Verizon will create a separate company for the assets being sold. That company will simultaneously be spun off to Verizon shareholders and merged with Frontier.
Verizon shareholders will own between 66 percent and 71 percent of the new company after the deal closes, while Frontier shareholders will own between 29 percent and 34 percent. The deal is expected to close within 12 months.
Frontier will also assume $3.3 billion of debt as part of the deal.
The exact number of shares to be issued will be determined by Frontier's average 30-day share price before the closing of the merger, but the per-share price will be collared between $7 and $8.50.
Verizon shareholders will receive one share of Frontier stock for roughly 4.2 shares of Verizon stock held as of the record date.
Frontier closed Tuesday's trading session at $7.57 on the New York Stock Exchange.
Frontier will acquire Verizon's wireline business in 14 states, increasing the number of access lines in its portfolio to 7 million.
Frontier expects to save about $500 million in costs annually from the deal, by leveraging its existing networks and infrastructure.
About 11,000 Verizon employees will move to Frontier as part of the transaction.
(Reporting by Anupreeta Das; Editing by John Wallace, Dave Zimmerman)