TPG Capital and a division of Goldman Sachs are paying $71.50 a share for telecommunications company Alltel (AT). The deal, valued at $27.5 billion is a 10% premium over the current stock price. The Wall Street Journal points out that this is about 23% higher than where its shares traded in late December when the newspaper wrote that the company was a buyout target.
But, the price is still likely to be viewed by Alltel’s shareholders as too low. Over the last six months, AllTel’s shares are up 15%. But Verizon’s (VZ) are up over 20% and AT&T”s (T) have risen over 25%.
Alltel has already spun-off its landline business, which was likely worth less that the wireless business that it retained. Landline operations are under pressure from cable company VoIP offerings. Alltel’s cellular foot print is very large, making the company especially attractive.
The low premium on the deal is likely to bring objections from shareholders and, perhaps, a higher bid.
Douglas A. McIntyre
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