Verizon investors would receive one share of FairPoint (NASDAQ:FRP) for each 55 shares of Verizon that they own. The deal would be worth about $1 billion to Verizon investors based on FairPoint’s Friday closing price of $18.54. Verizon stockholders would own 60% of the company.
In addition, the spun-off phone assets would be assigned $1.7 billion in Verizon debt.
In Maine, Vermont and New Hampshire, Verizon serviced about 1.5 million local access lines as of last September.
At $1,800 per access line, the deal appears to be in line with recent transactions, and serves to take another slug of debt off Verizon’s balance sheet without incurring taxes for shareholders. However, small shareholders could come out of the deal with a handful of FairPoint shares worth little more than the commissions that would be incurred in selling them.
FRP 1-yr chart: