Verizon Communications Inc. (VZ) - Spinoff

Telecommunications giant Verizon Communications Inc. (VZ) announced it will be spinning off it's consumer telephone business in Maine, New Hampshire and Vermont. The divisions will be sold/traded to an existing company Fairpoint Communications, Inc. (FRP). Details on the transaction are as follows:

The Verizon operations being sold would first be transferred to a newly created unit that would issue $1.7 billion worth of new debt before being sold to FairPoint.

Of the $2.72 billion being paid by FairPoint in the deal, Verizon shareholders would receive about $1.02 billion in FairPoint stock. Verizon would receive $1.7 billion, consisting of both cash and an undisclosed portion of the debt securities issued before the spinoff. Verizon would not own any shares in FairPoint after the transaction is completed.

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The deal with FairPoint is expected to be completed within the next year.

FRP currently has a market cap of $720 Million so this is an absolutely massive transaction for them and for that reason alone, worth monitoring.

Verizon spun-off it's yellow page business to form Idearc (IAR) a few months ago.

These are the type of strategic moves I like to see in a company but I still dislike the underlying businesses. High debt load, commodity characteristics and slow growth, I just can't find anything too attractive here.