=DJ Alltel CEO Sees Merger Synergies Of $40 Million >AT
By Roger Cheng
Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--
Alltel Corp. (AT) and Valor Communications Group Inc. (VCG) have highly complementary rural footprints, said Chief Executive Scott Ford.
Alltel had its choice of several potential partners but Valor was the easiest with which to integrate, Ford said during a Friday conference call to discuss the deal.
Valor was an existing customer in its billing system, so Alltel was familiar with the company. Ford said he projects potential cost reductions from the merger of $40 million.
Alltel plans to spin off its wireline business and merge it with Valor in a much anticipated deal worth $9.1 billion. The deal focuses Alltel's operations solely on the faster growing wireless business, while giving Valor added scale and the potential for cost reductions.
As part of the transaction, Valor agreed to assume about $4.2 billion in debt. It will issue 400 million shares of its stock for a 15% stake in the combined landline business. Alltel shareholders, meanwhile, will receive 1.05 shares of Valor stock for each Alltel share they hold. The tax-free transaction is expected to close by mid-2006.
Alltel plans to buy back $3 billion in stock, as well as pay a 50-cent dividend after the deal. Even after returning that value to shareholders, Ford said the company will still be able to invest in new wireless technology.
On the wireline side, Ford believes the combined company will be a substantial cash generator for a long time, and should continue to be aggressive in returning value to shareholders in addition to investing in technology.
Also on the call, Chief Financial Officer Jeffery Gardner said one priority for the wireline business will be to further push services such as high-speed Internet and satellite video.
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December 09, 2005 09:42 ET (14:42 GMT)
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