Verizon’s $20bn Frontier Deal Wins Vote Despite Private Equity Resistance

Verizon Communications secured shareholder approval for its $20 billion acquisition of Frontier Communications, overpowering resistance from a handful of sponsors who had campaigned against the deal.

The transaction, which values Frontier at $38.50 per share and includes around $10 billion in assumed debt, faced organized opposition from post-reorganization shareholders Cerberus Capital Management and Glendon Capital Management. The firms, which collectively control 17 percent of Frontier’s equity after converting pre-petition claims in a 2020 bankruptcy, argued the deal materially undervalues Frontier’s fiber infrastructure.

“At the current price, Verizon would be walking away with a steal,” wrote Glendon Capital in a letter to Frontier’s board. “This simply cannot be allowed without objection.”

Ares Management also participated in Frontier’s reorg and retained Houlihan Lokey to evaluate options for its 16 percent stake, though the firm did not publicly join efforts to reject the deal.

The dissent was largely focused on the growing market appetite for valuable fiber assets, which some shareholders felt wasn’t fully captured in Verizon’s offer.

As evidence, the group pointed to BCE’s recent $3.6 billion acquisition of Ziply Fiber—previously part of Frontier until it was sold to WaveDivision Capital and Searchlight Capital Partners—which has a comparable network and commanded a substantially higher valuation.

Arguing that a similarly rich outcome was achievable for a pure-play fiber asset like Frontier, opponents to the Verizon deal said an offer above $50 per share was justified.

Glendon added, “Our analysis of the most recent and relevant comparable transactions as well as expected future cash flows both prove the inadequacy of a $20 billion enterprise valuation for Frontier. We urge the board to go back to the negotiation table to obtain an increased offer from Verizon.”

The apparent discount could be partially blamed on activist firm Jana Partners, which took a stake in Frontier last year and pushed for a sale of the business on an accelerated timeline vs. management’s plans.

Though, in some sense, it’s now come full circle: Frontier’s last deal with Verizon was part of what pushed it over the edge into bankruptcy.

In 2016, Frontier purchased a regional telco from the carrier with what proved to be unsustainable debt financing. The company eventually filed for Chapter 11 in 2020 and emerged in 2021 after an $11 billion debt-for-equity deal was reached with unsecured bondholders, including Cerberus, Ares, and Glendon — which had the chance to build their positions at prices as low as 30 cents on the dollar, the bottom of pre-petition trading for Frontier’s unsecured notes.

The sponsors chose to relist Frontier shortly after the restructuring and quickly returned to the bond markets to finance $4.1 billion in network upgrades, transforming the business from a legacy copper-line operator into the U.S.’ largest pure-play fiber provider.

Proxy advisors ISS and Glass Lewis recommended that investors abstain from voting on the Verizon proposal, effectively opposing the current terms.

“Given the possibility of substantially more value down the line, and the lack of urgency to approve a transaction that is not projected to close for more than a year, it seems reasonable for shareholders to exercise the optionality of abstaining for the time being,” wrote ISS.

But, not everyone agreed that the offer was really that bad. BNP Paribas analysts noted that both AT&T and T-Mobile had reviewed Frontier but were unwilling to match Verizon’s price.

The deal is expected to close by early 2026, pending regulatory approval.