Verizon snaps up Alltel for $28.1B

The rumors are true.  Verizon Wireless announced this morning that it will purchase Alltel Corp. in a cash merger valued at $28.1 billion. The deal, which is with Alltel Corp. and Atlantis Holdings (an affiliate of private investment firm TPG Capital and GS Capital Partners), is structured so that Verizon 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 merger is expected to close by year-end and is subject to regulatory approvals. This will make Verizon Wireless the No. 1 wireless operator in the U.S. with nearly 80 million subscribers. Verizon currently has more than 65.7 million customers while Alltel has about 13.2 million subscribers in 34 states. AT&T will move to the No. 2 position with about 71.4 million customers.

The deal makes sense in many ways. Alltel has been a long-time roaming partner for Verizon and it currently operates in 57 markets that Verizon does not serve.  And there are more similarities: Like Verizon, Alltel is a CDMA carrier using the Qualcomm's BREW platform for content delivery. Alltel also has recently announced plans to migrate to the LTE technology for its 4G path, a move that Verizon has also said it will make.  

Alltel President and CEO Scott Ford will continue in his current position as head of Alltel until the merger is completed.

Verizon says that after integration costs it expects to realize synergies of more than $9 billion from reduced capital and operating expense savings. 

In a research note, Matt Thornton, analyst with Avian Securities said that while the deal will temporarily benefit LG and Nokia because it will mean that LG, which has a dominant presence with Verizon, will now be able to extend into Alltel territories. Nokia, which is expected to release two or three new CDMA devices for Verizon later this year may also see benefits from this merger. 

For more:
-See this release

Related stories:
Verizon in talks to buy Alltel
Private equity firms snag Alltel for $27.5B
Rumor Mill: Verizon Wireless to acquire Alltel

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