Verizon Wireless To Acquire Alltel For $28.1 Billion
Under the terms of the agreement, Verizon Wireless will acquire the equity of Alltel for approximately $5.9 billion. Based on Alltel's projected net debt at closing of $22.2 billion, the aggregate value of the transaction is $28.1 billion.
The buy pushes out No.1 mobile phone giant AT&T Corp. to second place. Verizon Wireless is a joint venture of Verizon Communications and Vodafone Corp. Little Rock, Ark.-based Alltel was acquired last May by PG Capital and GS Capital Partners, the private equity division of Goldman Sachs Group, for $27.5 billion.
Alltel has more than 13 million customers in markets in 34 states, including 57 primarily rural markets that Verizon Wireless does not serve.
The Alltel acquisition by the private equity firms last year sparked rumors that more consolidation was on the horizon in the industry.
The largest acquisition prior to this was AT&T/BellSouth in 2006 for $86 billion. AT&T said that the transaction consolidated ownership and management of Cingular Wireless. At the time, AT&T said it planned to immediately integrate AT&T, BellSouth and Cingular wireless and wireline Internet Protocol networks. The new entity, said AT&T, would accelerate the introduction of broadband services, such as IP-based services, and expand broadband access in remote and rural locations in the traditional BellSouth region.
Verizon Wireless said its acquisition will provide Alltel customers with the advanced fourth-generation services Verizon Wireless uses via LTE technology.
In addition, Verizon Communications, majority owner of Verizon Wireless, expects that the Alltel transaction will be immediately accretive, excluding transaction and integration costs.
"This is a perfect fit, with Alltel's high-value post-paid customer base, its solid financials, our common network technology, and significant, readily attainable synergies," said Ivan Seidenberg, Verizon CEO and chairman of the Verizon board, in a statement.