Investment Firms Buy Alltel for $24.8 Billion

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.

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