IT?S OFFICIAL: VERIZON TO BUY ALLTEL FOR $28.1 BILLION
After a one-day media frenzy sparked by a leaked report on financial news network, CNBC, officials with Alltel and Verizon announced a $28.1 billion deal that will create the largest wireless carrier in the U.S.
Alltel?s 13.2 million subscribers will vault Verizon Wireless past AT&T as the nation?s largest mobile phone company with over 80 million customers and revenues of nearly $33 billion annually.
In May 2007, Alltel announced a $27.5 billion private equity buyout by TPG Capital and Goldman Sachs Partners.? The go-private transaction preserved Alltel?s corporate headquarters in Little Rock and most of its 3,200 Arkansas jobs.
Today?s announcement will surely cut into that workforce as Verizon officials seek to recover about $1 billion in annual savings by weeding out duplicate jobs and cutting costs through the elimination of roaming agreements between the two companies.
Verizon will pick up a number of new markets in the South and Midwest, as well as in rural regions of the country where Alltel built its network strength.? In addition to Verizon shareholders, the FCC and the U.S. Department of Justice must approve the deal.
Alltel President and CEO Scott Ford will continue in his current position as head of Alltel until the merger is completed, according to a joint company release.
"Both Alltel and Verizon Wireless have long track records of delivering a high-quality customer experience in the marketplace," Ford said. "The combination of our two companies will continue and improve upon that heritage as, together, we can more quickly deliver an expanded range of innovative products and services to our customers."
Verizon Wireless expects to realize synergies with a net present value, after integration costs, of more than $9 billion driven by reduced capital and operating expense savings. Synergies are expected to generate incremental cost savings of $1 billion in the second year after closing, officials confirmed.
Alltel serves 57 primarily rural markets where Verizon Wireless does not currently operate.? The companies have agreed on a break-up fee of about $500 million if the deal falls apart.
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