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Verizon buys Alltel for $28.1 billion, may locate regional HQ in LR Friday, Jun 6, 2008 By Jason Wiest Arkansas News Bureau LITTLE ROCK - Alltel Corp. CEO Scott Ford says the company's impending sale to telecom giant Verizon Wireless is not a tragedy for Alltel's 3,000 employees or the city. "It's not a funeral, it's a transition," Ford told reporters Thursday, just hours after Verizon announced its buyout of the Little Rock-based company in a $28.1 billion deal that would form the nation's largest wireless service provider. The combined company would leapfrog current industry leader AT&T. Going into the buyout, Verizon is the nation's second largest wireless company; Alltel is fifth. Thursday's announcement came just seven months after TPG Capital and GS Capital Partners took Alltel private. The timing caught Alltel's employees, whose jobs are now in limbo, off guard. It has been widely anticipated Alltel eventually would be sold to Verizon after two private equity firms took the Little Rock-based telecom private in November, but most did not expect the move for years. Even Ford said he was surprised. "I don't think anybody thought that they (Verizon) would move this quickly to pick the asset up," he said. "I believed that we had a three- to five-year run coming without any kind of major corporate activity." An air of uncertainty, fear and bewilderment lingered Thursday at the company's 20-acre campus overlooking the Arkansas River. Ford insisted the sale's ramifications would not be as bad as some speculate, but said details of Verizon's plans were unknown. "I think Little Rock will be much better off than the 'Oh, they're going to shut down all the corporate headquarters and all these jobs are going to go away,'" Ford said. "It's going to have some impact on all of us. It will have very little impact on the greatest number of people." More than 500 people on the Alltel campus work in the company's call center, which Ford said Verizon plans to keep and possibly expand. Verizon also is considering locating a regional headquarters in Little Rock, he said. Currently, the nearest of Verizon's 20 regional headquarters is in Lewisville, Tex., outside Dallas. About 250 people are employed there, Verizon spokeswoman Audrey Lundy said. Gov. Mike Beebe welcomed Verizon's expanded presence in the state and touted Alltel's local work force. "In acquiring Alltel, Verizon is obtaining a company with deep Arkansas roots and qualified, dedicated employees," Beebe said in a statement released by his office. "I hope those attributes will resonate strongly as decisions are made about how best to incorporate Alltel into the Verizon family." A "few hundred" of Alltel's roughly 15,000 employees nationwide have corporate staff functions and that group would be most affected by the merger, Ford said. Subject to regulatory approval, the deal is expected to close by the end of the year, after which Ford said he would leave the business. Other top executives likely will go as well, he said. University of Arkansas economist Kathy Deck said the takeover could be detrimental to Arkansas' capital city in some ways. "When you have a nationally recognized company's headquarters in your area, that is very important for the overall branding of your area," Deck said. "It's really hard to replace them in the public consciousness, and in terms of the leadership that they bring to community organizations, even to further economic development in the state." Alltel officials held a series of meetings with management teams Thursday and planned an all-employee meeting today for those at the headquarters. Discussions for the deal began several weeks ago, but Ford said he did not know how they were initiated. Word of a deal surfaced in reports Wednesday that Verizon officials and Alltel's private owners were in "deep talks" for Alltel to be bought for the second time in less than a year. A major catalyst for the sale, Ford said, was the inability of banks that financed the go-private transaction for TPG Capital and GS Capital Partners to sell notes to investors in the credit crunch that emerged after the deal's announcement. Verizon was able to purchase the debt at a discount, he said. Verizon bailed the banks out of the debt, and TPG Capital and GS Capital Partners earned "about a 30 percent return on their equity against a market that's down 25 to 30 percent in the same time frame," Ford said. Shares of Verizon (NYSE: VZ) closed Thursday at $38.96, up $1.98 for a 5.6 percent gain. |
