M&A

Alltel Agrees to $27.5 Billion Buyout

Latest private-equity acquisition would reportedly be the largest ever in the telecommunications industry.
Stephen TaubMay 21, 2007

On Sunday evening, wireless provider Alltel announced that it has agreed to a $27.5 billion all-cash acquisition by TPG Capital (formerly Texas Pacific Group) and GS Capital Partners (a subsidiary of Goldman Sachs). The private-equity firms would also assume $2.7 billion in debt.

According to the Associated Press, Alltel is the nation’s fifth-largest wireless company and owner of its largest geographic network. The New York Times also observed that if the deal is approved by shareholders and regulators, it would be the largest buyout ever in the telecommunications industry.

Merrill Lynch, Stephens, and JP Morgan Securities served as Alltel’s financial advisors.

Besides Goldman, financing will be provided by Citigroup, Barclays, and Royal Bank of Scotland. According to The Wall Street Journal, the buyout group is expected to put up about $4 billion of its own equity, while banks are expected to make equity bridge loans of more than $600 million.

The purchase price of $71.50 per share is 23 percent higher than Alltel’s closing price on December 29, when a potential transaction was first reported in the media, according to the company.

“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 Alltel chief executive officer Scott Ford.

Ford, who will remain in his current role, told the Journal that top management has also been asked to stay but that they are still “working out the details.” According to the paper, which cited a regulatory filing, Alltel’s top five executives would receive a combined $250 million if they were to leave during a change in control.