A pair of investment firms have agreed to acquire Alltel Corp., the fifth-biggest U.S. wireless company and owner of the nation’s largest geographic network, in a deal worth $24.8 billion (EU18.4 billion).
The telecommunications company announced Sunday that it had signed an agreement to be acquired by TPG Capital, formerly Texas Pacific Group, and GS Capital Partners, a subsidiary of Goldman Sachs. The investors also agreed to take on Alltel’s $2.7 billion (EU2 billion) in debt.
“This transaction delivers substantial and certain value to our shareholders while providing the company with long-term partners who share our commitment to our customers, employees and the communities we serve,” Alltel CEO Scott Ford said in a statement.
“This transaction also ensures our customers can continue to rely on Alltel to deliver high-quality service and leading edge products and services.”
The deal, if approved by shareholders and regulators, is expected to close during the fourth quarter of this year or the first three months of 2008, Alltel said.
Alltel has about 12 million cell-phone customers, mainly in the South, West and Midwest. That ranks it fifth in number of customers, after Cingular, Verizon , Sprint and T-Mobile, but the company’s service “footprint” is larger than any of those rivals, Ford said.
The agreement calls for the two investment firms to acquire all of the outstanding common stock of Alltel for US$71.50 per share in cash. According to Alltel, that represents a 23 percent premium over Alltel’s share price before word of a possible buyout first appeared in the media Dec. 29.
Trading in Alltel’s stock closed Friday at $65.21, down 14 cents from the day before. The per share buyout price would represent a premium of only about 10 percent over Friday’s share price.
Ford said in a telephone interview that the buyout price is “a 10 percent premium over a price that clearly anticipated this outcome” after scores of articles had been written about Alltel’s prospects in the first months of this year.
The announcement was the second in a week of a buyout of a corporation based at Little Rock to be taken private by the new owners. On Wednesday, data-management firm Acxiom Corp. announced it was to be acquired in a buyout worth about $2.25 billion (EU1.67 billion).
Ford said in the phone interview that the Alltel deal resulted from “a very thoughtful, very careful, very thorough review” over several months by the Alltel board of the best options for assuring the company would be able to continue serving well both its customers and its shareholders.
Wireless Mobile Telecom Wireless News
Alltel Corp. (NYSE: AT) today announced that it has signed a definitive merger agreement to be acquired by TPG Capital and GS Capital Partners (”GSCP”), in a transaction valued at approximately $27.5 billion.
Under the terms of the merger agreement, TPG Capital and GSCP will acquire all of the outstanding common stock of Alltel for $71.50 per share in cash. The purchase price per share represents a 23% premium over Alltel’s closing share price prior to media reports of a potential transaction published on December 29, 2006. Alltel intends to pay its regular quarterly common share dividend until closing.
Alltel’s Board of Directors has unanimously approved the merger agreement after a comprehensive review of the company’s strategic options, and has recommended the approval of the transaction by Alltel’s shareholders. Completion of the transaction, which is currently expected to occur by the fourth quarter of 2007 or by the first quarter of 2008, is contingent upon customary closing conditions, including approval by Alltel’s shareholders and certain regulatory approvals. Shareholders will be asked to vote on the proposed transaction at a special meeting that will be held on a date to be announced. Scott Ford, Alltel’s chief executive officer, will remain in his current role. “This transaction delivers substantial and certain value to our shareholders while providing the company with long-term partners who share our commitment to our customers, employees and the communities we serve,” said Mr. Ford. “TPG and GSCP are long-term investors who are willing to make the investments necessary to continue to grow our wireless business in all of our markets. This transaction also ensures our customers can continue to rely on Alltel to deliver high-quality service and leading edge products and services.”
“Alltel is a great company with a terrific management team,” said Jim Coulter, founding partner, TPG. “We look forward to working with them to continue to grow one of the nation’s premier wireless providers.”
“Alltel has a long history of growth through strategic acquisitions, combined with a strong focus on customer service,” said Richard Friedman, head of the Merchant Banking Division at Goldman Sachs. “We are excited about this opportunity to partner with an exceptional management team to continue to support their strategies for growth.”
Merrill Lynch & Co., Stephens Inc. and JP Morgan Securities Inc. acted as Alltel’s financial advisors, and Wachtell, Lipton, Rosen & Katz acted as legal advisor. Citigroup and Goldman Sachs acted as financial advisors to TPG and GSCP; Cleary Gottlieb Steen & Hamilton LLP acted as legal advisor to TPG; Weil Gotshal & Manges LLP acted as legal advisor to GSCP, and Akin Gump Strauss Hauer & Feld LLP acted as regulatory counsel to the buyers. Acquisition financing will be provided by Goldman Sachs, Citigroup, Barclays and RBS.
Wireless Mobile Telecom Wireless News
Deutsche Telekom (DT) has denied reports which suggest it is considering the sale of its US wireless arm T-Mobile USA. Press reports have claimed that private equity firm Blackstone, which is a 4.5% shareholder in the German telco, wants DT to offload its US operations. Rival wireless operator Alltel has just been sold to equity firms TPG Capital and Goldman Sachs Capital Partners(GSCP) for a total of USD27.5 billion. T-Mobile USA is the country’s fourth largest cellular operator, with 26 million subscribers at the end of March.
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Investment Firms Buy Alltel for $24.8 Billion
