Sale of Alltel Tops List of 2007 Deals

by John Henry  on Monday, Jan. 21, 2008 12:00 am  

(For a list of the biggest deals made in Arkansas in 2007, click here and here. A spreadsheet version of this list is also available.

For a look at the top deals nationally, click here and here.)

The $27.5 billion buyout of Alltel Corp. by two private equity firms was the biggest deal in Arkansas in 2007. Nothing else came close.

And what would have been the second largest transaction - the sale of Acxiom Corp. - failed to happen. It was that kind of deal-making year, not only in Arkansas but nationwide.

Alltel's deal was actually the second-largest private equity deal in the nation in dollar value, according to Dealogic. It was exceeded only by Kohlberg Kravis Robert's purchase of TXU Corp. of Dallas, the Texas electric power company, for $43.8 billion.

That Alltel had been positioning itself for a sale was certainly no secret at the beginning of last year. Talk about Alltel on the sale block started when it spun off its wireline operations to form Windstream Corp. of Little Rock in 2006. Talk picked up as Alltel CEO

Scott Ford acknowledged that the company was looking at a range of strategic options, including a sale. But it was May before TPG Capital LLC and GS Capital Partners came up with the dough to seal the deal.

Before the transaction was completed, speculation arose about who the buyer might be. AT&T and Verizon were thought to be interested in the nation's fifth-largest wireless carrier. By selling to the private equity firms and going private, Alltel remains in Little Rock with nearly all its management intact.

And it proved to be quite the boon to investors. Stockholders received $71.50 a share in the deal - a 22.6 percent premium over the stock price when the rumors of a sale started the previous December.

There are advantages to being a private company, such as not being required by government regulations to reveal all the inside workings so that everyone, including competitors, can see what you're up to. There's also less pressure on the company to meet Wall Street's quarterly earnings expectations, leaving management with more options to expand the company.

The general satisfaction with the Alltel sale provides a sharp contrast with what would have been the second-largest deal in Arkansas last year.

Acxiom announced, also in May, that Silver Lake Partners and ValueAct Capital were buying the company for $3 billion. ValueAct was already the largest shareholder in the data-mining firm.



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