MELBOURNE - Cooper Investors Pty Limited, an Australian global investment manager and a significant shareholder in Frontier Communications (OTC:FTRCQ) Parent, Inc. (NASDAQ: FYBR), has publicly opposed Verizon Communications Inc (NYSE:VZ).'s proposed acquisition of Frontier. In a letter to Frontier's board of directors, Cooper Investors criticized the offer price of $38.50 per share as significantly undervaluing the company.
The investment firm believes that Frontier's standalone value could be up to 62% higher than the price offered by Verizon, and that a fair transaction value would be up to 94% higher. Cooper Investors has resolved to vote against the proposed transaction and is urging other stockholders to do the same at the upcoming special meeting scheduled for November 13, 2024.
Cooper Investors, which manages around $7 billion in assets, has expressed confidence that Frontier would be better off remaining an independent public company rather than accepting the current offer from Verizon. The letter to Frontier's board represents a notable instance of shareholder activism, where investors seek to influence a company's decisions by exercising their shareholder rights.
This announcement is based on a press release statement and represents the position of Cooper Investors as a significant investor concerned about the valuation and potential synergies that may not be adequately reflected in Verizon's offer. The firm's stance highlights the importance of shareholder engagement in corporate governance, especially in the context of mergers and acquisitions.
In other recent news, Frontier Communications has been the subject of significant developments. The company's stock was downgraded to Neutral by Citi, TD Cowen, and MoffettNathanson, despite an increase in the price target to $38.50. This adjustment was largely influenced by the recent announcement of Verizon Communications Inc.'s plans to acquire Frontier at a purchase price of $38.50 per share. The acquisition is expected to bolster Verizon's broadband footprint and is anticipated to close in 18 months subject to regulatory approval and a Frontier shareholder vote.
Frontier Communications has also secured over $23 million in grants to expand high-speed fiber broadband service in California's San Bernardino and Riverside counties. This initiative aligns with the state's 'Broadband For All' initiative, aiming to enhance internet connectivity in unserved and underserved communities.
On the financial front, Frontier reported a 2% revenue increase, hitting $1.48 billion, and a 5% growth in EBITDA during its Q2 2024 earnings call. Despite a net loss of $123 million, the company's operational cash flow remained robust at $374 million. These are the recent developments for Frontier Communications.
InvestingPro Insights
In light of Cooper Investors' opposition to Verizon's proposed acquisition of Frontier Communications, recent data from InvestingPro provides additional context to the situation. Frontier's market capitalization stands at $8.78 billion, which is notably lower than the valuation Cooper Investors suggests the company could achieve.
InvestingPro Tips highlight that Frontier has seen a "high return over the last year" and a "strong return over the last three months," with data showing a remarkable 112.22% price total return over the past year and a 25.8% return in the last three months. This performance may support Cooper Investors' argument that the company is undervalued at Verizon's offer price.
However, it's important to note that Frontier "operates with a significant debt burden" and "short-term obligations exceed liquid assets," according to InvestingPro Tips. These factors could influence the company's standalone value and may be considerations in the proposed acquisition.
The current price of $35.25 is close to Verizon's offer of $38.50, but still below the average analyst fair value target of $38.50. This suggests that some market participants see potential upside, aligning with Cooper Investors' view.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Frontier Communications, providing a deeper understanding of the company's financial position and prospects.
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