Verizon says $28.1B buyout of Alltel on track (AP)
23 minutes ago
LITTLE ROCK, Ark. - Verizon Wireless says it is moving forward with plans to acquire Alltel Corp. for $28.1 billion, although the country's financial climate has worsened since the companies reached an agreement four months ago.
Verizon maintains that the deal, which would make it the largest wireless carrier in the United States, is still on track to close by year's end, company spokeswoman Robin Nicol said Friday.
But a major ratings firm that evaluates companies' financial strength for world credit markets is not so sure.
"Considering the size of this deal, it would be surprising that Verizon would enter something with such significant risk that it really threatens to preclude this deal from closing," said Bill Densmore of New York-based Fitch Ratings.
In a Sept. 26 report, largely written by Densmore, Fitch identified several factors that could threaten New Jersey-based Verizon.
For one, it must have enough financial strength to buy assets it will probably have to sell in order for federal regulators to approve the deal. Also, the deal with Little Rock-based Alltel contains triggers that allow Verizon to back out if the company has to divest too many subscribers for federal approval.
So far, nothing has emerged from continuing talks between Verizon and the Department of Justice, Nicol said.
"There could be more markets we have to divest. Right now we have no idea," she said. "But even if those numbers increase, we still think we'll be able to reach an agreement with DOJ."
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Information from: Arkansas Democrat-Gazette, http://www.arkansasonline.com