In the latest alliance in the telecommunications industry, Global Crossing Ltd. of Bermuda is buying the larger U.S. telephone company Frontier Corp. for about $11.2 billion in stock.
The deal announced Wednesday gives Global Crossing a foothold in the U.S. market, where Frontier competes with long-distance phone service providers like AT&T Corp., MCI WorldCom Inc. and Sprint Corp.
Frontier also provides local phone service in its home market of Rochester, N.Y., as well in 31 other states and the District of Columbia.
The combined companies would have a 1999 revenue of more than $4 billion, a stock-market value of nearly $30 billion and more than 8,500 employees.
Global Crossing has been building a fiber-optic communications network to carry voice and data traffic worldwide. Together, the companies will connect 159 cities worldwide with more than 71,000 miles of fiber-optic cable.
Frontier had $2.6 billion in revenue last year and has over 8,000 employees.
Global Crossing, based in Hamilton, Bermuda, has about 200 employees and is on track to achieve $1 billion in revenue this year, according to The Wall Street Journal, which first reported the deal.
The acquisition has been approved by the boards of both companies but is subject to approval by shareholders and regulatory clearance. The deal is expected to close before October.
Global Crossing is headed by Robert Annunziata, a former top executive at AT&T, who became chief executive just a few weeks ago. Annunziata built Teleport Communications Group before selling the local-exchange carrier to AT&T for $12 billion in 1998.
Frontier's chief executive, Joseph P. Clayton, will become a vice chairman of Global Crossing.
On the news, Frontier shares shot up almost 14 percent, rising $6.12 to $50.75 a share at midmorning on the New York Stock Exchange.
Global Crossing tumbled 10 percent, or $5.25, to $46.25 a share on the NASDAQ.