Andre Yoskowitz
4 Jun 2008 19:47
Reports have surfaced from CNBC that Verizon is in talks to buyout rival carrier Alltel for $27 billion USD, an almost 8x premium over its current pre-interest, pre-tax earnings. The deal would be considered a friendly takeover as Goldman Sachs is in charge of the acquisition.
The reports say that allegedly there was an auction in the spring of last year for the company but that the value was too high. They now see the company's up front value as low enough to be acquired.
The deal should have its fair share of benefits for the acquiring company however. Alltel's service areas overlap Verizon's and Alltel even has a roaming deal with Verizon to allow Alltel customers to borrow Verizon airspace when there is none of their own. Buying out would help reduce competition and increase subscriber totals substantially.
Neither Alltel or Verizon had comments on the speculation. Currently, AT&T has the largest customer base in the US, but this deal could narrow that gap substantially for Verizon.