Verizon ( VZ) plans to spin off its wireline businesses in Maine, New Hampshire and Vermont and merge the operations into FairPoint Communications ( FRP).

Under the deal, the New England businesses will be transferred to entities owned by a newly organized unit of Verizon. This new subsidiary will incur $1.7 billion of newly issued debt and will then be spun off to Verizon's stockholders and immediately merged into FairPoint.

In connection with the merger, Verizon stockholders will receive one share of FairPoint stock for about every 55 shares of Verizon stock held as of the record date. That stock is currently equal to about $1.02 billion.

Upon the closing of the transaction, Verizon stockholders will own about 60% of the new company, and FairPoint stockholders will own about 40%.

Verizon said the deal's total value to its shareholders is $2.72 billion. In addition to the $1.02 billion in FairPoint stock, Verizon will receive $1.7 billion in value through a combination of cash distributions and debt securities issued to the company prior to the spinoff.

FairPoint, based in Charlotte, N.C., is a telecom provider will 31 local exchange companies in 18 states. It primarily serves rural and small urban markets. Verizon said the deal allows it to "focus more intently" on its other markets.

Verizon's Maine, New Hampshire and Vermont properties served about 1.5 million access lines, 180,000 DSL customers and 600,000 long-distance customers as of Sept. 30.

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