UPDATED: Verizon to Acquire Alltel In $28 Billion Deal

by Lance Turner and Jamie Walden  on Thursday, Jun. 5, 2008 10:25 am  

Verizon says it will buy Alltel Corp. of Little Rock.

(Click to read more from economic development officials on what the sale could mean to the local economy.)

If approved by regulators, the deal would also remake the landscape of U.S. wireless competition, propelling Verizon Wireless to the No. 1 spot among cell phone services in the country, with about 80 million subscribers after folding in Alltel's 13 million customers.

AT&T Inc. has about 71 million subscribers. Sprint-Nextel has about 53 million customers.

And the deal would mean a substantial payout for Alltel executives. Ford and other members of Alltel's management team have contracts that pay three years of salary and bonuses in the event that wireless firm sells.

(Click for more what Alltel executives might stand to make if the sale goes through.)

According to the statement from Verizon, Alltel CEO Scott Ford will remain with 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 said it 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, the company said.

Alltel has more than 13 million customers in 34 states, including 57 rural markets that Verizon Wireless says it does not serve.

Leaking Wednesday

Word about talks between the two firms began to leak on Wednesday. Financial news network CNBC was the first to report the talks. At the time, neither Verizon nor Alltel would comment on the story. Alltel spokesman Andrew Moreau told ArkansasBusiness.com that the company does not comment on rumors.

Earlier Thursday morning, Vodofone Group, part of a joint venture that owns Verizon Wireless, confirmed that Verizon was indeed in talks to buy Alltel. But it said there was "no assurance that a transaction will be forthcoming."

 

 

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