Frontier Corp, the US long distance telephone company that recently announced a restructuring plan, is to spend around $162m acquiring Internet access provider GlobalCenter Inc. The Rochester, New York organization will issue 6.4m shares to acquire all the outstanding shares of closely held GlobalCenter. The deal will enable Frontier to accelerate the updating of its offerings in the data services area by between one and two years, according to vice president of communications Randal Simoneti. The purchase will affect Frontier’s 1998 earnings, and it is understood it will absorb some $11.5m of GlobalCenter debt. Despite the recent axing of 700 jobs, or 8% of its workforce to cut its involvement in non-core businesses (CI No 3,269), Frontier is expected to hang on to the 240 staff it will inherit from GlobalCenter. Sunnyvale, California-based GlobalCenter (CI No 2,972) is privately held, with an annual turnover of around $24m. Frontier is confident the purchase will add around two to four cents a share to earnings next year, and hopes the deal will be closed within the next two to three months. On closure, GlobalCenter will trade under the name of Frontier GlobalCenter, operating as the company’s data service products division. As we went to press, Frontier shares were trading at $25.125, close to the $27.0 year high. But this is still a way off the mid $30s figure the company used to enjoy. Simoneti believes the share price has risen of late as the company becomes more publicly recognizes, and in turn more of a take over target, which he refused to comment on further.
