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Global Crossing buys Frontier
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March 17, 1999: 12:32 p.m. ET
Telecom newcomer paying $11B for bigger local, long-distance operator
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NEW YORK (CNNfn) - Telecom upstart Global Crossing Ltd. said Wednesday it is buying Frontier Corp., a phone company with six times the revenue of its would-be new parent, for $11.2 billion in stock.
Global Crossing, a fast-growing, two-year-old company building a fiber-optic network for voice and data, said it will swap $62 a share in stock for each Frontier share, a big premium over the closing price of 44-5/8 Tuesday.
The purchase of Rochester, N.Y.-based Frontier, which was founded in 1899 and has been aggressively updating its systems, would give Bermuda-based Global Crossing (GBLX) a network based on Internet technology and a presence in the important U.S. market.
The deal will create a company with expected sales of about $4 billion serving 159 cities in 20 countries with 8,500 employees, the companies said. Frontier's (FRO) 1998 revenue of $2.6 billion dwarfed Global Crossing's $424 million in annual revenue.
At a news conference announcing the deal, Frontier CEO Joseph Clayton said the company expects few, if any, employees to lose their jobs as a result of the transaction. And Global Crossing CEO Robert Annunziata said the companies have no plans to spin off Frontier's local phone businesses.
"Merging with Frontier will enable us to greatly accelerate our aggressive growth strategy," said Annunziata, who left AT&T just three weeks ago to join Global Crossing. Annunziata built Teleport Communications Group before selling the local phone carrier to AT&T for $12 billion last year.
Clayton will become vice chairman of Global Crossing. Frontier's operations selling local and long-distance service will continue to be based in Rochester.
The deal would make Global Crossing the latest telecom firm to buy a larger rival since WorldCom bought MCI last year and Qwest acquired LCI International.
The Global-Frontier deal requires approval from regulators and shareholders. The companies expect to close the deal in the third quarter.
Global Crossing shares were down 4-5/8 to 46-7/8 in early Wednesday trading. Frontier shares were up 6-1/2 to 51-1/8. 
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