Alltel, the nation’s fifth-largest mobile carrier, agreed Sunday to a $27.5 billion cash buyout from investment firms TPG Capital and GS Capital Partners (GSCP). The deal calls for TPG and GSCP to acquire all outstanding shares of Alltel for $71.50 per share.
The price per share represents a 23 percent premium over Alltel’s closing share price on Dec. 29, when media reports of a potential transaction were first published.
The Alltel board unanimously approved the merger agreement, but the deal is still subject to Alltel’s shareholders’ approval and certain regulatory clearances. The transaction is expected to close by the first quarter of next year.
“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,” Scott Ford, Alltel’s CEO, said in a statement.
With approximately 12 million subscribers, the Little Rock, Ark.-based Alltel ranks behind Cingular, Verizon, Sprint and T-Mobile in customers, but Alltel’s geographic footprint is larger than any of its rivals. The company’s mobile network sprawls across parts of the South, West and Midwest.
Last year, Alltel earned $1.13 billion as sales climbed 17 percent to $7.9 billion.
“TPG and GSCP are long-term investors who are willing to make the investments necessary to continue to grow our wireless business in all of our markets,” Ford said. “This transaction also ensures our customers can continue to rely on Alltel to deliver high-quality service and leading-edge products and services.”
A longtime rural wireline operator, Alltel sold its wireline operations in 2005 to Valor Communications group for approximately $1.9 billion.
Historically, wireless and wireline services were very similar, and one carrier could make decisions to accommodate the growth of both, Ford said at the time of the spinoff. Today, he said, with the capital investments needed to build in each, it makes more sense to do it as separate companies.
“Alltel is a great company with a terrific management team,” Jim Coulter, a founding partner of TPG, said in a statement. “We look forward to working with them to continue to grow one of the nation’s premier wireless providers.
Alltel shares were up $7.25 percent in late morning trading to $69.94.