Alltel Corp, the US cellular network operator, said late on Sunday that it had agreed to be acquired by the private equity arm of Goldman Sachs and the Texas Pacific Group for $27.5bn in cash.

The deal marks one of the biggest forays of private equity into the cellular sector and highlights the growing reach of buyout groups. Several private equity firms had been looking at Arkansas-based Alltel for the last several weeks but there had been concerns about the company’s high price. Alltel shares had been rising since the company was first identified as a buyout candidate in December and closed Friday at $65.15.

The winning offer from TPG and Goldman was $71.50 per share, a 10 per cent premium to the company’s Friday closing price and about 23 per cent above where the shares were trading before bid rumours surfaced in December. Alltel is among the largest US cellular operators with 12m customers.

Unlike many buyout targets, Alltel has been reporting strong financial performance. The group said it earned $230m in the first quarter on revenues of $2bn. Alltel said it added 867,000 new customers in the quarter.

”This transaction delivers substantial and certain value to our shareholders while providing the company with long-term partners who share our commitment to our customers, employees and the communities we serve,” said Scott Ford, Alltel chief executive.

”TPG and GSCP are long-term investors who are willing to make the investments necessary to continue to grow our wireless business in all of our markets. This transaction also ensures our customers can continue to rely on Alltel to deliver high-quality service and leading edge products and services.”

Mr Ford will remain as chief executive of Alltel. The buyout groups said they planned to retain Alltel’s management team.

Merrill Lynch, Stephens Inc and JP Morgan Chase advised Alltel. Goldman and Citigroup advised TPG and Goldman Sachs Capital Partners.

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