Alltel has reached an agreement to purchase Western Wireless Corporation in a stock-and-
cash transaction valued at approximately $6 billion. Alltel will gain about 1.4
million domestic wireless customers in 19 western and midwestern states that are contiguous to existing properties, giving the company 10 million domestic wireless customers in 33 states and creating additional scale and scope in attractive and complementary markets. It also adds 1.6 million international customers in six countries.
Each share of Western Wireless stock will be exchanged for .535 shares of Alltel common stock and $9.25 in cash. Western Wireless shareholders will have the ability to make an all-stock or all-cash election, subject to proration. In aggregate, Alltel will issue approximately 60 million shares of stock and pay approximately $1
billion in cash. Alltel also will assume estimated net debt of $1.5 billion.
The transaction, expected to close by mid-year 2005, will be accretive to earnings
in 2006. The agreement requires approval from Western Wireless shareholders and
regulatory authorities. The stock portion of the merger consideration is expected to be
tax-free to Western Wireless shareholders.
"This transaction strengthens Alltel's position as the nation's top regional communications company and makes sense financially and strategically," said Scott Ford, Alltel president and CEO. "Alltel will maintain a solid balance sheet and financial flexibility while adding properties in the high-growth wireless industry. The domestic properties of Western Wireless are contiguous to Alltel's existing operations and create additional wireless scale and scope in attractive and
complementary markets. We look forward to servicing their customers and benefiting
from the leadership and experience of John Stanton, who will serve on our board."
Western Wireless, based in Bellevue, Wash., is a premier rural communications provider with wireless operations in 107 markets in 19 states and international operations that are licensed to service more than 50 million people in six countries, primarily Austria and Ireland. The domestic retail stores operate under the Western Wireless and Cellular One brand names.
"The wireless industry is gravitating swiftly to a smaller number of large national and regional players," said John W. Stanton, chairman and CEO of Western Wireless. "The combination of Western Wireless with Alltel creates a rural operator using multiple technologies with the largest footprint in the country. We believe that combining forces is in the best interests of our shareholders, customers and employees. We are
confident in the future of Alltel and look forward to becoming a major shareholder in this exciting company."
Following are highlights of the transaction:
- Alltel will be the nation's fifth-largest wireless carrier with 10 million domestic wireless customers serving a population of 72 million in 33 states, covering about 25 percent of the U.S. population and 56 percent of the land mass in the contiguous United States; 1.6 million international wireless customers in six countries serving a population of 50.6 million; and 3 million wireline customers in 15 states.
- The combination builds a stronger wireless presence for both retail and wholesale operations. The company will have a retail presence in 33 states and will become a leading independent regional roaming partner for each of
the nation's top four wireless carriers.
- Alltel will have nearly $10 billion in annual revenues and operating income before depreciation and amortization of nearly $4 billion. Alltel's
revenue mix increases to 70 percent wireless, the fastest-growing area in the communications industry.
- ALLTEL will add wireless operations in 9 new states: California, Idaho, Minnesota, Montana, Nevada, North Dakota, South Dakota, Utah and
Wyoming. The transaction also significantly expands its wireless operations in several other states, including Arizona, Colorado, New Mexico and Texas.
- The addition of the international properties will diversify Alltel's wireless assets and increase growth opportunities.
- The company expects net present value of operating synergies, interest and tax
savings to be approximately $800 million.
- Alltel will maintain a solid credit rating and a well-capitalized balance sheet and ample liquidity. The company remains well positioned for growth and the generation of free cash flow.
"This combination strengthens Alltel's position as a key player in the highly competitive communications industry," Ford said. "This transaction is in keeping with A;;te;'s efforts to maintain our financial discipline while adding wireless properties that contribute to our long-term growth."
Stephens Inc. and Merrill Lynch & Co. served as financial advisers to Alltel and rendered a fairness opinion. Goldman Sachs also rendered a fairness opinion to Alltel. Bear, Stearns & Co. Inc. served as financial adviser to Western Wireless and rendered a fairness opinion. Skadden, Arps, Slate, Meagher & Flom LLP served as
counsel to Alltel. Wachtell, Lipton, Rosen & Katz and Friedman Kaplan Seiler & Adelman LLP served as counsel to Western Wireless.
Alltel is a customer-focused communications company with more than 13 million customers and $8 billion in annual revenues. Alltel provides wireless, local telephone, long-distance, Internet and high-speed data services to residential and business customers in 26 states.