Verizon Talking To Alltel About $27 Billion Buyout

by Darren

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Verizon is considering a buyout of Alltell for $27 billion. Alltell was taken private in November of 2008 by TPG and Goldman Sachs Capital Partners for roughly the same price. It doesn’t look like the private equity firms will make a huge profit, but would still make somewhere near $1/2 billion for their efforts.

Verizon (NYSE: vz) seems likely to pay no more than did TPG and Goldman, and will be doing so for a company that has increased its earnings before interest, taxes, depreciation and amortization (Ebitda) by 10 percent since the leveraged buyout was announced last may.

Verizon is expected to pay roughly 8 times Alltel’s current Ebitda, in contrast to the 9.2 times Ebitda that TPG and Goldman paid last year when they put in roughly $4.6 billion of equity and lined up $23.8 billion of debt financing to get the deal done.

When Alltel was taken private, it was an easier time for companies to get credit. Since credit has become tighter, the buyers felt they needed to get out in favor of Verizon who can put the necessary investment in Alltel to make the deal work.

The original investors are said to be happy to get out while the getting is good and make some easy money for their efforts.

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