Verizon’s attempt to acquire fiber-focused rival Frontier Communications is already facing a major obstacle. According to a report published on Monday by Reuters, some of Frontier’s major shareholders believe Verizon’s $20 billion bid is too low.
Back in early September, Verizon put out a bid that would see it pay $38.50 per share for Frontier while also assuming its debt. The offer was accepted by Frontier’s board of directors, but receiving the green light from the majority of the shareholders will likely be a much tougher task.
Hedge fund Glendon Capital Management, which is Frontier’s second-largest shareholder with a 10% stake, reportedly plans to vote against the Verizon takeover. The sources close to Glendon told Reuters that the current bid “undervalues” Frontier.
Investment firm Cerberus Capital Management, which holds 7.3% of Frontier, is also unsatisfied with the $38.50 per share price. However, it is unclear whether it intends to be against the takeover when shareholders vote on November 13.
Even if Verizon manages to convince the shareholders to approve the deal, it would still need to get the nod from U.S. regulators, which is not a foregone conclusion according to industry experts.
Frontier’s stock closed at $35.25 per share on Monday. The company’s shares are up more than 25% since the Verizon deal was announced and 36.52% up year-to-date.