Alltel Corp., the nation’s fifth-largest wireless carrier, is being floated as a potential target for a leveraged buyout by private-equity firms, according to unnamed sources in an article in today’s Wall Street Journal.
Alltel currently has a market value of $21.7 billion and a debt load under $3 billion-a considerably low debt relative to other telecom carriers. The low overall debt-to-value ratio would enable potential buyers the ability to pile on additional debt as part of a buyout plan, making any acquisition all the more attractive.
Sources close to the matter also suggest that a bidding war could emerge between Verizon Wireless and Sprint Nextel Corp., which also operate CDMA networks similar to Alltel. Generating even further interest, Alltel’s stock shot up nearly 5 percent to $61.09 by midday trading, bringing shares to its highest mark since July when the company spun off its landline business in a $4.9 billion deal.
The carrier serves more than 11 million customers, which it has built up through a number of acquisitions, the most recent being a $1.08 billion purchase of Midwest Wireless Holdings L.L.C. that added 400,000 customers. The Little Rock-based company is considered the heavyweight of rural wireless carriers, though it also offers service in some larger markets.
