Verizon Sells New England Assets for $2.72 Billion

Verizon Communications Inc. is selling some of its New England assets to FairPoint Communications Inc., a rural LEC based in North Carolina, for $2.72 billion.

Such a move was expected, as Verizon executives have indicated they want to focus on other markets and opportunities.

FairPoint owns local phone networks in 31 markets, mostly rural, in 18 states, including Maine, New Hampshire and Vermont, where FairPoint is buying Verizon’s assets. The transaction includes Verizon's switched and special access lines in those regions, as well as its Internet service and enterprise voice CPE accounts. The deal further encompasses the long-distance voice and private line customer accounts (for lines with beginning and ending points within the three states) that Verizon served in the region before the 2006 merger with MCI Inc.

The companies also emphasized that Verizon’s 3,300 employees in those states will not be laid off – rather, 3,000 will become FairPoint employees and the remaining 300 will stay with Verizon. FairPoint added it plans to hire 600 more employees.

Verizon shareholders will receive approximately $1.02 billion in FairPoint stock when the deal closes, but Verizon will not own any FairPoint shares when the transaction is completed. Verizon also will receive $1.7 billion in cash and debt securities issued before the spinoff takes place.

FairPoint’s shares had jumped nearly 16 percent, or $2.87, by the time the New York Stock Exchange closed on Tuesday, reaching $21.41. Verizon’s stock, on the other hand, fell 17 cents to close at $37.16.

Merrill Lynch & Co. advised Verizon in the transaction, while Lehman Brothers served as FairPoint's lead financial adviser. Deutsche Bank Securities and Morgan Stanley also acted as advisers to FairPoint.

FairPoint Communications Inc. www.FairPoint.com  

Verizon Communications Inc. www.verizon.com