Wifi Revolution

Alltel Corp. (News - Alert), recently announced that it has signed a definitive merger deal to be fully acquired by TPG Capital LLP, the global buyout group of TPG and GS Capital Partners (GSCP), a private equity division of Goldman Sachs Group Inc.

Headquartered in Little Rock, Arkansas, Alltel is the owner and operator of one of America’s largest wireless networks catering to nearly 12 million customers across 35 states in the country.

 

Alltel was valued at approximately $27.5 billion at the time of the agreement. As per the terms of the merger, both buyers have agreed to pay cash at the rate of $71.50 per share to acquire its outstanding common stock.

 

Alltel’s board of directors unanimously voted for the merger and recommended the same to its shareholders. Completion of the merger transaction is expected to occur either by the end of this year or the first quarter of 2008, subject to shareholder and regulatory approvals.

 

Most members of its management team, including Scott Ford, CEO, will retain their positions even after completion of the deal.

 

Scott Ford, Alltel's chief executive officer, who will remain in his role, commented in a statement to the press, “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. This transaction also ensures our customers can continue to rely on Alltel to deliver high-quality service and leading edge products and services.”

 

Head of the Merchant Banking Division at Goldman Sachs, Richard Friedman commented, “Alltel has a long history of growth through strategic acquisitions, combined with a strong focus on customer service. We are excited about this opportunity to partner with an exceptional management team to continue to support their strategies for growth.”

Alltel’s revenue for 2006 was recorded at $7.9 billion, which is approximately 20 percent more than the amount earned in 2005.

 

The company operates within US Midwest and Southeast. It provides state-of-the-art mobile phone services to its vast customer base and is planning to expand its product portfolio by venturing into the WiMAX market.

 

The merger is certainly a profitable proposition for Alltel, however, some market analysts have noted that the increase in such deals would limit the number of telecommunications firms and squeeze the market competition; thereby leading to an increase in prices while some argue that the increase in competition among a selected few, would result in better quality of service and will keep prices in check.

 

 

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