Mobile phone and wireless services provider Alltel Corp. on Sunday agreed to a US$27.5 billion buyout, a deal likely to spur more such acquisitions in North America.
The Little Rock, Arkansas company, which serves 12 million mobile phone subscribers in 35 states, signed a deal to be bought by TPG Capital LLP and the private equity division of Goldman Sachs Group Inc. The two investment companies will pay US$71.50 per share for Alltel stock.
Alltel's board of directors has approved the merger, but it still faces a shareholder vote and regulatory approval, the company said in a statement. Alltel CEO Scott Ford will remain at his post after the deal, as will most of Alltel's management team. Alltel's revenue in 2006 totaled $7.9 billion, up 20 percent over 2005. The company mainly operates in the U.S. Midwest and Southeast.
The deal could speed up other rumored acquisitions in North America. Three investment firms have reportedly been seeking partners to bid for BCE Inc., the Canadian telecommunications company, and rumors purport that a few groups are interested in Sprint Nextel Corp.
Last year, AT&T Inc. finalized a US$86 billion deal to buy BellSouth Corp., the largest telecommunications merger in U.S. history. The deal left just two major telecom vendors standing in the U.S.: AT&T and Verizon Communications Inc. Some pundits fear these huge telecommunications deals could result in higher prices for users because there are fewer competitors. But others argue that increased competition from cable operators and wireless companies should keep prices under control.
Alltel hopes to close the deal by the end of 2007, or the first quarter of 2008, it said. Alltel became a pure wireless company last year after spinning-off its wireline business to form Windstream Corp. In addition to mobile phone services, the company is also among a few firms working to offer WiMax wireless Internet access to users.