Top 10 2007: Alltel Sold

by Arkansas Business Staff  on Monday, Dec. 24, 2007 12:00 am  

CEO Scott Ford led Alltel Corp. through the biggest-dollar transaction in Arkansas history.

Alltel Corp. of Little Rock, the fourth-largest publicly traded company headquartered in Arkansas and the fifth-largest wireless telephone provider in the country, announced in May that it would be sold to two private equity funds, Texas Pacific Group and Goldman Sachs Capital Partners, for $27.5 billion.

It was the biggest price tag on a business transaction in Arkansas history, but it proceeded so smoothly - especially compared to our No. 2 story - that the closing of the deal on Nov. 16 seemed anticlimactic. A lawsuit by dissatisfied shareholders was short-lived, and the biggest criticism has been just how quickly the Federal Communications Commission approved the complex deal.

The payday was undoubtedly noticeable for the shareholders who received $71.50 for shares that were priced just over $58 when Alltel started shopping itself around in December 2006.

The timing of the sale was not coincidental. The transaction closed just in time for Alltel to declare its intention to participate in the FCC's upcoming auction of licenses to broadcast in the 700 megahertz spectrum, a chunk of bandwidth brimming with wireless application possibilities.

If one of its major companies had to be sold, Arkansas fared very well in the Alltel deal. By selling to private investors rather than a larger telecom, Alltel's headquarters will remain in Little Rock and its management has remained substantially unchanged, with Scott Ford still CEO. Only Kevin Beebe, group president of operations, lost his job, but even he got a two-year consulting contract.

But the deal changed Alltel from a publicly traded company with remarkably little debt (especially after spinning off its wireline business and a chunk of its debt into Windstream Corp. of Little Rock) to a privately owned company with some $24 billion in debt to service. While some analysts wonder if the company can make a profit while making those debt payments, Alltel employees wonder how much payroll will have to be cut.

Also see:

Alltel Exploring 'Strategic Options'
Alltel to Potential Buyers: 'We've Got Options'
WSJ: 3 Equity Groups Consider Purchase of Alltel Corp. 

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