Verizon Wireless has entered into an agreement with Alltel
Corporation and Atlantis Holdings LLC, to acquire Alltel
Corporation in a cash merger.
Verizon Wireless will acquire the
equity of Alltel for approximately $5.9 billion. Based on Alltel's
projected net debt at closing of $22.2 billion, the aggregate value of
the transaction is $28.1 billion. The deal will make Verizon Wireless the #1 wireless operator in the U.S. with
nearly 80 million subscribers.
The merger should be completed by the end of the year, subject to regulatory approval.
Alltel and Verizon Wireless both use the same network technology - CDMA using the Qualcomm's BREW platform for
content delivery. Alltel also has recently said it plans to migrate to the LTE
technology for its 4G path, the same technology Verizon plans to deploy.
Once this transaction closes, customers of both companies will have
access to an expanded range of products and services, including a
premier lineup of basic and advanced devices and an expanded IN Network
calling community. Alltel customers also will benefit from advanced
services including over-the- air downloadable music from a
three-million-song library, and a network that is nationwide, for a
uniform coast-to-coast experience. They also will be able to take
advantage of industry-leading consumer policies, including Test Drive
and Worry Free Guarantee®.
Alltel serves more than 13 million customers in markets in 34
states. This includes 57 primarily rural markets that Verizon Wireless
does not serve. The transaction puts the Alltel markets and customers
on a path to advanced 4th generation services as Verizon Wireless
deploys LTE technology throughout its network over the next several
years. Alltel’s customers also will reap the benefits of Verizon
Wireless’ Open Development initiative, which welcomes third-party
devices and services to use the Verizon Wireless network.
Verizon Communications, the owner of the majority stake in Verizon
Wireless, expects that the transaction will be immediately accretive,
excluding transaction and integration costs. “This is a perfect fit,
with Alltel’s high-value post-paid customer base, its solid financials,
our common network technology, and significant, readily attainable
synergies,” said Ivan Seidenberg, Verizon chief executive officer and
chairman of the Verizon board. “Verizon Wireless’ acquisition of Alltel
clearly provides opportunities for enhanced value for Verizon
shareholders.”
Alltel President and Chief Executive Officer Scott Ford will
continue in his current position as head of Alltel until the merger is
completed.
“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.
Alltel and Verizon Wireless both use a common network technology,
which provides advantages of a seamless transition for Alltel
customers, ease in integrating the two companies’ networks, and scale
efficiencies in operating the larger integrated network.
Morgan Stanley acted as financial advisor to Verizon Wireless on
this transaction and is providing bridge financing. Debevoise &
Plimpton LLP acted as legal advisor to Verizon Wireless.
Citibank, Goldman Sachs and RBS advised the sellers on the
transaction. Wachtell, Lipton, Rosen & Katz acted as legal advisor
to Alltel, and Cleary Gottlieb Steen & Hamilton LLP and Ropes &
Gray LLP acted as legal advisors to the sellers.