![]()
MOST SHARED
- Keeping America Great
- Kohlberg Kravis Bidding for Morgan Stanley's CICC Stake
- Cisco Has 84% of Tandberg, Won't Extend Bid
- UK Economy Turned, Inflation to Spike: BoE Economist
- Australia Regulator Opposes Caltex-Exxon Deal
- Case Closed but Woods Scrutiny Continues
- Australia Parliament Rejects Carbon Trade Laws
- Hyundai's US Auto Sales Jump 46% in November
- 'Black Swan' Shuns Public Life Because of Bernanke
- Look Ahead: Markets Count Down to US Jobs Report
- FHA to Toughen Mortgage Rules in Lenders Crackdown
- Obama to Send More Troops; Seeks Afghanistan Exit
- GM Removes CEO Henderson; Whitacre Is Interim Chief
- UK Economy Turned, Inflation to Spike: BoE Economist
- Who Were the Biggest Winners And Losers This Year?
- GE, Comcast Complete Deal Over NBC Universal: Source
- Case Closed but Woods Scrutiny Continues
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.
- Will the Fed raise rates? Will the dollar continue its slide? CNBC experts weigh in on the year ahead.
- What may make this decade stand out are the extremes. After one of the worst global recessions ever, we take a look back.
- Goldman Sachs has forbidden employees from gathering in private holiday parties of 12 or more.
- Do you have what it takes to run your own business? Ask yourself these questions.
- Heavily armed pirates in Somalia have set up a sort of stock exhange to fund their hijackings.
- Since its launch in 1998, Google has become a primary force on the Internet. How much do you know about the company?













