Summary
Verizon Communications Inc. (VZ) filed an 8-K on June 10, 2008, detailing a significant move by its subsidiary, Verizon Wireless. On June 5, 2008, Verizon Wireless entered into an Agreement and Plan of Merger to acquire Alltel Corporation for approximately $5.9 billion in cash. This acquisition, which will see Alltel continue as a wholly owned subsidiary of Verizon Wireless, is subject to regulatory approvals, including the expiration of the Hart-Scott-Rodino waiting period, and other customary closing conditions. The transaction also includes Alltel's projected net debt of approximately $22.2 billion, making the total enterprise value significantly higher. In conjunction with the Alltel acquisition, Verizon Wireless also secured a $7.550 billion 364-day credit facility. This facility is intended to finance the Alltel acquisition, the acquisition and refinancing of Rural Cellular Corporation, and general corporate purposes. The company has already drawn $4.795 billion under this facility to fund the purchase of approximately $4.8 billion in senior interim loans related to Alltel. This strategic move signals Verizon's intent to expand its wireless market share and strengthen its competitive position.
Key Highlights
- 1Verizon Wireless is acquiring Alltel Corporation for approximately $5.9 billion in cash.
- 2The acquisition is structured as a merger where Alltel will become a wholly owned subsidiary of Verizon Wireless.
- 3The total enterprise value of the Alltel transaction is significantly higher due to Alltel's projected net debt of approximately $22.2 billion at closing.
- 4The merger is contingent on customary closing conditions, including regulatory approvals such as the Hart-Scott-Rodino waiting period.
- 5Verizon Wireless has entered into a $7.550 billion 364-day credit agreement to finance the Alltel acquisition and other strategic initiatives.
- 6Verizon Wireless has already borrowed $4.795 billion under the new credit facility to fund the purchase of Alltel-related senior interim loans.