Verizon Buys Alltel; TPG, Goldman Gain $1.9 B

123jump.com Staff
05 Jun, 2008
New York City

Verizon Wireless agreed to acquire Alltel Corporation, a rural telecom operator with 13 million customers. Verizon will pay $5.9 billion in cash and $22.2 billion of estimated debt. TPG and Goldman Sachs controlled fund have agreed to sell the company that they purchased for $24.2 billion less than thirteen months ago with only $4 billion in equity.

[R]10:45AM New York – Verizon Wireless agrees to acquire rural telecom company Alltel for $5.9 billion in cash offer and assume$22.2 billion in debt.[/R]

Verizon Wireless agreed to purchase Alltel Corporation for $5.9 billion in cash from private equity buyout groups TPG and GS Capital Partners of Goldman Sachs. The rural telecom company has 13 million subscribers in 57 rural markets where Verizon lacks a presence. Alltel potentially covers 31 million subscribers in 35 states where it is active.

Based on Alltel’s projected net debt at closing of $22.2 billion, the aggregate value of the transaction is $28.1 billion. Verizon communication has a majority stake in Verizon Wireless and Vodafone Group of the UK is the other large shareholder. The company estimated that the acquisition will be immediately accretive to excluding the transaction and integration costs.

“This is a perfect fit, with Alltel’s high-value post-paid customer base, its solid financials, our common network technology, and significant, readily attainable synergies,” said Ivan Seidenberg, Verizon chief executive officer and chairman.

Private equity buyout firms TPG and a fund controlled by Goldman Sachs agreed to pay $71.50 per share for Alltel on May 20, 2007. At the time of the deal it was reported that the funds had put equity of $4 billion and the rest of the deal valued at $24.17 billion was funded by a debt from a consortium of banks. The deal was at the time the largest telecom deal.

At the time of the deal, according to a proxy statement filed with the SEC, the wireless company was the fifth largest telecom company in the U.S. with 12 million subscribers.

Verizon Wireless ((VZ)) rose $1.82 to $38.85.

Earnings review

ADC Telecommunications Inc, a global supplier of network infrastructure products said second quarter sales rose 16% to $403 million from $349.3 million a year ago. Net income in the quarter decreased 4.0% to $16.3 million or 14 cents per diluted share compared to net income of $92.1 million or 72 cents per share, a year ago.

ADC Telecommunications Inc stock ((ADCT)) rose $1.15 to $16.80.

Amerco, Uhaul rental van operator said fourth quarter revenues declined 0.02% to $432 million from $441 million a year ago. Net loss in the quarter was $14.0 million or 85 cents per diluted share compared to net loss of $15.6 million or 89 cents per share, a year ago.

Amerco stock ((UHAL)) added 52 cents to $59.03.

Collective Brands, Inc, the footwear retailer said first quarter revenues jumped 22% to $932.4 million from $728.6 million a year ago. Net income in the quarter decreased 49.35% to $19.7 million or 31 cents per diluted share compared to net income of $38.9 million or 59 cents per share, a year ago.

Collective Brands, Inc stock ((PSS)) increased 57 cents to $11.84.

Comtech Telecommunications Corp, the communications equipment maker's said third quarter revenues grew 16% to $138.1 million from $119.9 million a year ago. Net income in the quarter edged up less than 1% to $19.3 million or 70 cents per diluted share compared to net income of $19.1 million or 71 cents per share, a year ago.

Comtech Telecommunications Corp stock ((CMTL)) edged $1.93 higher to $47.80.

Dynamex Inc, delivery and logistics provider said third quarter revenues increased 9% to $113 million from $103.5 million a year ago. Net income in the quarter rose 8% to $3.8 million or 37 cents per diluted share compared to net income of $3.5 million or 32 cents per share, a year ago.

Dynamex Inc stock ((DDMX)) added 45 cents to $25.52.

Financial Federal Corporation, Financial services company said third quarter revenues increased 8% to $29.1 million from $26.9 million a year ago. Net income in the quarter dipped 0.15% to $12.69 million or 52 cents per diluted share compared to net income of $12.71 million or 49 cents per share, a year ago.

Financial Federal Corporation stock ((FIF)) increased 79 cents to $25.23.

FuelCell Energy, Inc, a manufacturer of high efficiency ultra-clean power plants using renewable biogas said second quarter revenues increased 64% to $31.6 million from $11.4 million a year ago. Net loss in the quarter was $25.8 million or 38 cents per diluted share compared to net loss of $18.8 million or 32 cents per share, a year ago.

FuelCell Energy, Inc stock ((FCEL)) fell 9 cents to $9.40.

Greif, Inc, industrial packaging company said second quarter sales rose 13% to $918 million from $815 million a year ago. Net income in the quarter rose 62% to $48.7 million or 82 cents per diluted share compared to net income of $18.6 million or 32 cents per share, a year ago.

Greif, Inc stock ((GEF)) added $2.13 to $71.05.

IDT Corporation, a diversified holding company active in telecommunications and energy said third quarter revenues declined 7% to $453.2 million from $485.4 million a year ago. Net loss in the quarter was $82.2 million or $1.10 per diluted share compared to net loss of $15.9 million or 20 cents per share, a year ago.

IDT Corporation stock ((IDT)) fell 46 cents to $2.91

Jos. A. Bank Clothiers, Inc, apparel retailer said first quarter revenues rose 12% to $145.4 million from $129.5 million a year ago. Net income in the quarter climbed 18% to $9.8 million or 53 cents per diluted share compared to net income of $8.4 million or 45 cents per share, a year ago. Same-store sales rose 6.4%.

Jos. A. Bank Clothiers, Inc stock ((JOSB)) rose 68 cents to $31.04.

Martek Biosciences Corporation, which sells nutritional oils and dietary supplements, said second quarter revenues rose 18% to $90.7 million from $76.7 million a year ago. Net income in the quarter rose 89% to $9.2 million or 28 cents per diluted share compared to net income of $4.9 million or 15 cents per share, a year ago.

Martek Biosciences Corporation stock ((MATK)) fell $2.26 to $35.27.

Star Bulk Carriers Corp, Greek drybulk shipper said first quarter revenues were $42.5 million compared with none in the year ago period. Net income in the quarter was $17.8 million or 36 cents per diluted share compared to net income of $275,000 million or 1 cent per share, a year ago.

Star Bulk Carriers Corp stock ((SBLK)) rose 17 cents to $14.47.

Ulta Salon, Cosmetics & Fragrance, Inc, Specialty retailer said first quarter sales increased 23% to $293.3 million from $194.1 million a year ago. Net income in the quarter jumped 62.79% to $4.3 million or 7 cents per diluted share compared to net income of $ 1.6 million or 10 cents per share, a year ago.

Comparable store sales (sales for stores open at least 14 months) increased 3.9%, compared to an increase of 9.2% in the first quarter of fiscal 2007.

Ulta Salon, Cosmetics & Fragrance, Inc stock ((ULTA)) rose 99 cents to $14.36.


Asian markets review

In Tokyo Nikkei 225 Index closed lower 94.45 or 0.65% to 14,341.12, in Hong Kong Hang Seng index increased 132.04 or 0.55% closed to 24,255.29. In Australia ASX 200 index lower 54.40 or 0.97% to close 5,530.10. In Malaysia KL Composite index decreased 29.56 or 2.36% closed to 1,223.56.

In South Korea Kospi Index decreased 1.50 or 0.08% to close at 1,832.31, in Thailand SET index closed higher 0.90 or 0.11% to 809.82 and Indonesia JSE Index edged increased 37.09 or 1.57% to 2,399.68. Sensex index in India increased 254.93 or 1.64% to 15,769.72.