TPG Capital and Goldman Sachs' private equity unit said Sunday they had agreed to acquire #5 U.S. wireless provider Alltel Corp. for about $27.5 billion. The buyout price, $71.50/share, is about 10% higher than Friday's close of $65.21, and a 23% premium on its price since it was identified as a target in December. The deal is the largest ever buyout in the telecom sector. People familiar with the matter said the deal was rushed through because the buyers needed the liquidity available in today's debt markets in order to finance the deal. They said two other groups, one consisting of Providence Equity and Blackstone, and the other KKR and Carlyle, were expecting the auction to end on June 6, and were surprised by Sunday's announcement. The group will put up $4 billion of its own funds; a Citigroup consortium is making 'bridge' loans of another $600 million. It's unclear how Alltel shareholders will perceive the deal, but in other recent buyout attempts, shareholders have often pushed to reject initial offers in the hopes of something more. TPG founding partner Jim Coulter said in the press release: "Alltel is a great company with a terrific management team... we look forward to working with them to continue to grow one of the nation's premier wireless providers." Other telecom providers whose names have been circulated as possible buyout targets include BCE (KKR and three pension funds) and Sprint-Nextel. Alltel shares are up 5.3% in the pre-market to $68.65; Goldman Sachs shares are up 0.4% to $231.25; Sprint-Nextel shares are up 1.5% to $21.10.
Sources: Press release, Wall Street Journal, New York Times
Commentary: Alltel Still A Pricey Buy • Corporate Debt Picks for a High Risk Market • Goldman Sachs Loves Blackstone - Just Starting Own Buyout Fund, That's All
Stocks/ETFs to watch: Alltel Corp. (NYSE:AT), Goldman Sachs Group Inc. (NYSE:GS), BCE Inc. (NYSE:BCE), Sprint Nextel Corp. (NYSE:S)
Conference call transcript: Alltel Q1 2007, Goldman Sachs F1Q07
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