Verizon Wireless Strikes Deal to Buy Alltel

Updated from 2:53 p.m. EDT

Verizon Wireless, the joint venture of Verizon (VZ Quote) and Vodafone (VOD Quote), said it will acquire privately held Alltel in a deal worth $28.1 billion, making it the top U.S. carrier.

Under the terms of the agreement, Verizon Wireless will buy the equity of Alltel, the fifth-largest U.S. wireless carrier with 13 million subscribers, for approximately $5.9 billion. Based on Alltel's projected net debt at closing of $22.2 billion, the total value of the transaction is $28.1 billion. The deal is the biggest telecom merger since SBC and AT&T joined in March 2006.

The deal comes a year after TPG Capital and Goldman Sachs (GS Quote) took Alltel private in a $27.5 billion deal. Verizon had been widely expected to bid for Alltel before the leveraged buyout occurred last May.

"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 Verizon CEO Ivan Seidenberg. "Verizon Wireless' acquisition of Alltel clearly provides opportunities for enhanced value for Verizon shareholders."

Verizon said it is targeting completion of the merger by the end of the year, subject to obtaining regulatory approvals. "We look forward to reviewing their plan once they submit something to the [Federal Communications Commission]," said FCC spokesman Robert Kenny. "We certainly can not speculate on what the details are or how the Commission may rule on the transaction at this time."

Verizon would presumably join Alltel's subscriber base with its 67 million Verizon Wireless subscribers to surpass AT&T (T Quote) and become the largest U.S. wireless carrier. Verizon Wireless is currently second in the U.S. behind AT&T, which has more than 71 million subscribers.