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UPDATE 2-Verizon, Alltel get antitrust approval to merge
October 30, 2008 / 8:50 PM / in 9 years

UPDATE 2-Verizon, Alltel get antitrust approval to merge

(Adds quote, background on deal)

WASHINGTON, Oct 30 (Reuters) - Verizon Wireless won antitrust approval to purchase rural wireless provider Alltel Corp on the condition that it divest assets in 22 states, the U.S. Justice Department said on Thursday.

The deal still needs approval from the U.S. Federal Communications Commission which is expected to approve the combination at a Nov. 4 meeting.

Verizon Wireless, owned by No. 2 U.S. phone company Verizon Communications Inc (VZ.N) and Britain’s Vodafone Group Plc (VOD.L), said in June it would buy Alltel for $28.1 billion, including debt.

The divestitures required by the Justice Department cover all of North Dakota and South Dakota; large portions of Colorado, Georgia, Kansas, Montana, South Carolina, Utah and Wyoming; and parts of Alabama, Arizona, California, Idaho, Illinois, Iowa, Minnesota, Nebraska, Nevada, New Mexico, North Carolina, Ohio and Virginia.

“The divestitures required are necessary to protect wireless customers and are among the most extensive required by the department in a wireless case,” said Thomas Barnett, head of the Justice Department’s Antitrust Division.

Under the deal, Verizon Wireless would acquire the equity of Alltel for $5.9 billion and take on an estimated $22.2 billion in debt, mostly incurred when Alltel was taken private in November in a leveraged buyout by TPG Capital [TPG.UL] and Goldman Sachs Group Inc’s (GS.N) GS Capital Partners.

Investors have been concerned that debt financing costs for the deal have risen, but Verizon said earlier this week that the transaction would pay for itself and the long-term benefits were not negated by short-term issues in financial markets. (Reporting by Diane Bartz; Editing by Tim Dobbyn)

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