By Lisa Kerner
Charlotte, N.C., Jan. 16 - FairPoint Communications, Inc. agreed to merge with a subsidiary of Verizon Communications Inc. wireline operations in Maine, New Hampshire and Vermont in a transaction worth an estimated $2.715 billion.
The transaction is expected to close within 12 months, according to a news release.
Under the merger agreement, FairPoint will issue about 53.8 million of its common shares to be distributed in a tax-free Reverse Morris Trust transaction to the shareholders of Verizon as well as assume roughly $1.7 billion of debt.
FairPoint said it has financing commitments for "a substantial portion of this debt," the release stated.
The transaction will give FairPoint's shareholders 40% ownership and Verizon's shareholders 60% ownership of the combined company.
In addition, three existing directors from FairPoint will maintain their positions on the combined company's board of directors. Verizon will nominate six independent directors to the new board.
"The ability to integrate and serve these northern New England operations will establish FairPoint as one of the preeminent telecommunications operators in the region," FairPoint chief executive officer Gene Johnson said in the release.
"We are confident that our experience as a national operator will enable us to provide high levels of service and innovative new products."
Verizon Communications, based in New York, delivers broadband and other wireline and wireless communication solutions.
Charlotte, N.C.-based FairPoint is a provider of communications services to rural communities.
| Acquirer: | FairPoint Communications, Inc.
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| Target: | Verizon Communications Inc.
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| Transaction value: | $2.715 billion
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| Announcement date: | Jan. 16
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| Expected closing: | Within 12 months
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| Stock price for target: | NYSE: VZ; $37.33 on Jan. 12
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| Stock price for acquirer: | NYSE: FRP; $18.54 on Jan. 12
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