Texas Pacific Group-Goldman Sachs consortium buys Alltel

Largest telecom buyout effected.

22 May, 2007: Signalling the largest buyout ever in the history of the telecommunications industry, wireless phone company Alltel has announced that it has agreed to be sold to a consortium of private equity firms for an amount of $27.5 billion. The consortium includes the Texas Pacific Group and the private equity arm of Goldman Sachs.

The deal has brought to an end long months of speculation about the future of Alltel. The company, which had been built through a series of acquisitions of regional carriers and now has more than 12 million customers, had announced earlier this year that it was considering various options for its future. The speculations were that it was up for sale.

Texas Pacific and Goldman will pay $71.50 a share for Alltel, representing a premium of about 10 percent over Alltelís closing price on Friday and about 25 percent over its price late last year. Merrill Lynch, Stephens and JPMorgan Chase advised Alltel. Citigroup and Goldman advised Texas Pacific and Goldman Sachs.

However, it was not easy to predict how the Alltel shareholders would react to the sale. Reports pointed out that during recent buyout attempts, shareholders had rejected deals in hopes of pushing the buyers to pay more. Texas Pacific and Goldman came in with their offer last week, hoping to short-circuit what was expected to be a formal auction. Several other private equity consortiums had lined up to bid for the company, including the Blackstone Group with Providence Equity Partners, and the Carlyle Group with Kohlberg Kravis Roberts & Company, according to the report.

Earlier, there were also speculations that Verizon, whose wireless customers switch to Alltelís network when they exit Verizonís coverage area, would eventually buy Alltel. These hopes have also been put to rest with the deal.




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