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Verizon Wireless has retained Morgan Stanley to sell overlapping assets in 85 cellular markets for its proposed acquisition of Alltel Corporation, a source familiar with the situation told mergermarket.
Potential buyers submitted indications of interest for the asset package on 22 August. Morgan Stanley is expected to circulate the confidential information memorandum in September, the source said.
A sector banker pegged the value of the assets, spread across the country in various locales, to be between USD 3bn and USD 4bn.
Morgan Stanley declined comment. Verizon and Alltel did not return phone calls.
A few companies have indicated interest for Verizon’s assets, the source said. “Groups of carriers and individual carriers have let Verizon’s advisor know they are interested in particular licenses but no one has tabled an offer price yet,” the source said.
On 22 July, following discussions with the Department of Justice (DOJ), Verizon agreed to divest assets in 85 markets to expedite its USD 28bn merger with Alltel. These markets comprise the entire states of North Dakota and South Dakota, as well as overlapping properties comprising partial areas within 16 additional states -- California, Colorado, Georgia, Idaho, Illinois, Kansas, Minnesota, Montana, Nevada, New Mexico, North Carolina, Ohio, South Carolina, Utah, Virginia and Wyoming.
The sector banker said Verizon may sell assets in other locations as well and will likely have greater visibility when the DOJ reaches a final decision. Antitrust lawyers have named 35 cities, not yet addressed by the DOJ, in which Verizon may have an unlawful concentration of spectrum. Those cities include Minneapolis, Cleveland, Toledo, Akron, Phoenix, Omaha, Tucson and Raleigh-Durham, North Carolina.
The composition of assets can be changed at any point and any divestiture transactions will be subject to transaction close and approval by the DOJ and the Federal Communications Commission, the source said. All the divested assets operate CDMA networks, except for the ones in Kansas, which are GSM network.
The DOJ is conducting its review and negotiating with Verizon. “I am sure the DOJ has let Verizon know that it expects the company to have a plan to divest these 85 markets, perhaps more,” the source said.
On 5 June, Verizon said it would acquire Alltel from private equity owners TPG Capital and GS Capital for USD 28bn. According to sources, Verizon hopes to close the deal by the end of the year.
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