Private equity firms snag Alltel for $27.5B

The rumors are now reality. Last night TPG Capital and the private-equity arm of Goldman Sachs Group, GS Capital Partners agreed to purchase Alltel for $27.5 billion. The firms will acquire all outstanding common stock of Alltel for $71.50 per share. The price is about 9.6 percent higher than what shares traded for on Friday. The deal is expected to close by fourth quarter 2007 or first quarter 2008, and is contingent upon shareholder approval.

The deal isn't unexpected. For months there has been speculation that Alltel was searching for a new owner. And earlier this month the Wall Street Journal fueled the buyout rumors when it reported that three groups of private equity firms were mulling an Alltel acquisition.

Alltel, the fifth-largest wireless operator in the U.S. has long been known for its innovation and customer-friendly approach. Unlike its Tier 1 operators, the firm culled together a nationwide footprint that consisted primarily of smaller cities and rural markets that offer growth potential without as much competition. In August 2005, Alltel purchased Western Wireless for $6.5 billion and in November 2005 it purchased Midwest Wireless for $1.075 billion.

The carrier, which has about 12 million subscribers, also has differentiated itself from its larger competitors by introducing rate plans such as My Circle, which allows subscribers to call up to 10 numbers (including numbers from different wireless carriers or landline numbers) as much as they want.

Much of the firm's innovation can be attributed to Alltel's management team, which includes CEO Scott Ford and Kevin Beebe, group president, operations. Ford has said that he will remain in his current role and other members of the management team have been asked to stay, however details are still being finalized. -Sue

For more:
- see this WSJ article. (sub. req.)
- read this press release (reg. req.)