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Alltel in large a $27.5 billion buyout deal

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May 22, 2007

On May 20, Alltel officially annouced that it has agreed to a buyout by two investment companies.

This ends many months of rumors and speculation about a potential deal.

The transaction is estimated to be worth $27.5 billion pending approval from the company's shareholders.

As part of the agreement, the investors agreed to take on Alltel's $2.7 billion in debt.

The investors are TPG Capital, formerly Texas Pacific Group, and GS Capital Partners, a subsidiary of Goldman Sachs.

The agreement calls for the two firms to acquire all of the outstanding common stock of Alltel for $71.50 per share in cash. The per-share buyout price would represent a premium of only about 10% over Friday's share price.

If approved by shareholders and regulators, the Alltel deal is expected to close in the fourth quarter or early next year.

In 2006, Alltel became a pure wireless company after it spun off its wireline business to form Windstream Corporation.

Also in 2006, the company acquired more than 500,000 subscribers through its purchases of Cellular One of Amarillo, Texas; First Cellular of Illinois; Midwest Wireless and Virginia Cellular.

The carrier ended the year with nearly 12 million subscribers. It's currently ranked as the fifth largest wireless operator in terms of subscribers behind AT&T, Verizon Wireless, Sprint and T-Mobile.

On May 4, Alltel reported impressive first quarter earnings. Income from its continuing operations increased 34% to $225.4 million, or 63 cents per share, from $168.6 million, or 43 cents per share, a year ago.

Overall, revenue grew 13 percent to $2.08 billion from $1.84 billion.

Additionally, Alltel reported that net additions were up 44 percent year over year, to 237,000. Total churn was 1.77%, a record low for the company. ARPU was $52.49, a 2% increase from last year, and data revenue per customer was $4.70, up 64% from last year.

The company's headquarters reportedly will remain in Little Rock, and no changes in the 15,000-person workforce are expected.

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Source: Wireless Week


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