![]()
- The Secret Lives of Traders—Seeking the Next Hot Thing
- China January Trade Surplus Soars as Imports Crumble
- Strip Greenspan of His Knighthood: SocGen Strategist
- Markets Finally Get Greek Deal —So Where's the Rally?
- Warren Buffett: Stocks Will Outperform Gold and Bonds
- Alibaba Plans to Buy Back Yahoo Stake, Go Private
- Greece Deal Fails to Convince, EU Demands More
- 'Mortgage Deal from Hell' Hurts Sound Borrowers: Bove
- Clint Eastwood: Super Bowl Ad Endorses No One
MOST SHARED
- Tesla Unveils First SUV: Model X
- China January Trade Surplus Soars as Imports Crumble
- Sony's Hirai to Extend PlayStation Strategy, Cut Costs
- China City Raises Cash Subsidies for Home Buyers
- India's Tata Steel Posts First Quarterly Loss in 2 Years
- Lightning Round: Yahoo!, CEC Entertainment, Standard Pacific and More
- Jobs You Can Do Forever
- Steelers' Antonio Brown Spends Super Bowl Week with Twitter Fan Turned BFF
- Alibaba Group Plans to Take Hong Kong Unit Private: Report
- How to Date a Wall Street Man
MOST POPULAR
HOT ON FACEBOOK
Verizon in Talks to Buy Alltel for $27 Billion
CNBC Anchor and Reporter
Verizon is deep in talks to acquire Alltel, the nation's fifth largest wireless carrier, for roughly $27 billion, people close to the talks have told CNBC.
![]() |
Don Ryan / AP |
Verizon [VZ
Loading...
()
] seems likely to pay no more than did TPG and Goldman, and will be doing so for a company that has increased its earnings before interest, taxes, depreciation and amortization (Ebitda) by 10 percent since the leveraged buyout was announced last may.
Verizon is expected to pay roughly 8 times Alltel's current Ebitda, in contrast to the 9.2 times Ebitda that TPG and Goldman paid last year when they put in roughly $4.6 billion of equity and lined up $23.8 billion of debt financing to get the deal done.
Officials at Verizon and Alltel declined all comment.
Verizon has long been looked at as the ultimate purchaser of Alltel, but failed to bid when the company was auctioned in the spring of 2007. According to people involved in that auction, Verizon believed Alltel's valuation was too high.
Of course, that was a far different time in the credit markets, when financial buyers were routinely outbidding strategic buyers despite the cost savings and revenue synergies available to the strategic buyers.
One year later, Verizon stands ready to take advantage of those cost advantages with this expected purchase.
Alltel's network is contiguous with Verizon's own and will allow the carrier to save the roaming charges it pays Alltel.
The addition of the network to Verizon is also expected to bring significant cost advantages in other areas.
Sources told CNBC that the sponsors are willing to sell only six months after they closed the deal because they'll get a slight premium to their equity investment, and there is a broad desire within private equity these days to generate a return when one is available.
While the premium for the equity may be slight, given the enormous leverage in the deal, the returns would seem to be good ones for TPG and Goldman.
Verizon's wireless unit is a dominant carrier in the United States and contributes the vast bulk of the company's cash flow.









