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WSJ: Equity Groups Ponder Alltel deal.

Three private equity groups have formed to attempt to buy Alltel Corp., according to an article last week in The Wall Street Journal.

The article says the groups "each have begun a series of meetings with Alltel's management." It cites "people familiar with the matter." The groupings include Blackstone Group and Providence Equity Partners; TPG Capital LLC (formerly Texas Pacific Group) and the private-equity arm of Goldman Sachs Group Inc.; and Carlyle Group and Kohlberg Kravis Roberts & Co., the Journal article said.

Alltel has acknowledged that it is exploring a range of strategic alternatives, including a sale, but it has not commented beyond that. Last Tuesday, The Wall Street Journal's Deal Journal blog noted that chatter had grown about a possible Alltel sale. Analysts have said Alltel could fetch anywhere from $25 billion to $30 billion.

"The phone company, which has a market capitalization of $22.4 billion, is trying to figure out ways to take better advantage of its balance sheet. The company carries about $2.7 billion of long-term debt, a low figure for a company that produces roughly the same amount in cash flow each year. By comparison, rival Sprint Nextel Corp. carries debt of nearly twice its annual cash flow," the Journal said.

The newspaper said Alltel "would appear to be an attractive candidate," but that its share price, up 7.8 percent this year, has given many possible buyers pause.

Investors and analysts have been buzzing about a possible Alltel buyout since December, when The Wall Street Journal first reported that equity firms were circling the company. At the company's fourth-quarter earnings call in February, CEO Scott Ford confirmed what many already suspected: the wireless phone company was exploring several strategic options, including a competitive or private equity buyout. The company has had little to say about its options beyond that.

Alltel has close to 12 million customers in 35 states, with a high penetration rate in rural areas.
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Author:Turner, Lance
Publication:Arkansas Business
Date:May 14, 2007
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