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Verizon Communications Inc. (NYSE:VZ) shares are trading lower by 3.84% to $41.31 during Wednesday’s session after a WSJ report indicated the company is in advanced discussions to acquire Frontier Communications in what’s believed to be a strategic move to strengthen its fiber network and compete more effectively with rivals such as AT&T Inc (NYSE:T).
Per the WSJ report and according to sources familiar with the situation, the deal, which could be announced as early as this week if negotiations proceed smoothly, would be substantial, considering Frontier's market value exceeds $7 billion.
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Understanding The Market’s Reaction: Acquiring Frontier Communications, which has a market value exceeding $7 billion, would likely require a significant financial outlay by Verizon.
This could involve taking on additional debt, which might raise concerns among investors about the company's balance sheet, cash flow, or potentially the dilution of existing shares if the deal involves issuing new stock.
Frontier has also faced significant operational and financial challenges in the past, including bankruptcy. Investors might be worried about the risks associated with integrating a troubled company into Verizon’s operations. If the integration doesn't go smoothly, it could lead to unforeseen costs and complications.
Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.
For example, in Verizon Communications’ case, it is in the Communication Services sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.
According to data from Benzinga Pro, VZ has a 52-week high of $43.42 and a 52-week low of $30.14.
