TPG, Goldman to buy Alltel in $25 billion deal

By Michael Flaherty

NEW YORK (Reuters) - Wireless company Alltel Corp. AT.N said on Sunday it had agreed to be bought by TPG Capital and the buyout arm of Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) for about $25 billion, making it the latest U.S. corporate giant to fall into private equity hands.

TPG Capital (formerly Texas Pacific Group) TPG.UL and GS Capital Partners will acquire Alltel for $71.50 per share in cash, the company said, in what would be among the largest private equity deals ever.

Alltel's stock closed at $65.35 on Friday, with its shares steadily climbing throughout the year on speculation of a takeover.

Including the assumption of debt, the deal is worth around $27.5 billion.

Private equity firms typically buy companies and sell them a few years later, borrowing most of the money to make their purchases. A frothy debt market has fueled a massive wave of leveraged buyouts in the last two years.

In the last few weeks alone, automaker Chrysler Group, contact lens company Bausch & Lomb, and credit card processor Alliance Data all agreed to be bought by private equity firms.

Analysts have said Alltel shares trade around 9 times its cash flow, an attractive multiple to private equity buyers who are increasingly paying in the double-digits as competition for deals grows tougher. Buyout firms seek strong cash flows to pay down the debt borrowed for the deal.

Private equity interest for the company surfaced late last year and heated up in February when Alltel, the top rural U.S. wireless provider, said during an earnings conference call it was reviewing its strategic options.