ROCHESTER, N.Y. -- Frontier Corp. accepted a revised $10 billion acquisition offer from Global Crossing Ltd., salvaging a purchase that was threatened by a plunge in the shares of Global, a 2-year-old phone company.
Global Crossing agreed to pay 2.05 shares for each Frontier share, a 12 percent increase to $49.20 a share based on Wednesday's closing price. Global Crossing's shares have tumbled 50 percent in the past three months, slashing the value of the original transaction by about $3.4 billion.
Global Crossing, which is building a worldwide fiber-optic network, needs Frontier's customers, traffic and revenue to compete with AT&T; Corp. and other big phone companies.
Some analysts said the stock of long-distance provider Frontier, which had a 19 percent drop in second-quarter profit, might fall if stockholders reject the agreement.
"Global Crossing had to pony up, and Frontier wasn't negotiating from a position of great strength," said John Groton, who helps manage funds at SIT Investment Associates Inc., which owns about 220,000 Frontier shares. "This is fair to both parties."
Frontier had the option of abandoning the original agreement if Global Crossing's shares fell below an agreed-upon range. Rochester, N.Y.-based Frontier gave up that right in exchange for more shares.
The new agreement would give Frontier shareholders about 45 percent of the combined company, up from about 33 percent.
Share of Hamilton, Bermuda-based Global Crossing fell $1.5625 to $22.4275. Frontier's shares dropped 50 cents, to $41.75.