NEW YORK - Alltel Corp. (AT) has agreed to acquire 360 Communications Co. (XO) in a stock deal valued at about US$4.2 billion, the companies said Monday.
The combination of Alltel, a rural telecommunications company, and 360, a wireless provider, will create a full-service communications provider primarily located in the Southeast and Midwest.
Under terms of the agreement, each 360 share will be exchanged for 0.74 Alltel share. Alltel will also assume about $1.8 billion in debt, the company said.
The equity value of the deal was less than the $4.8 billion price tag cited in news reports on Friday. Shares of 360 surged about 18 percent to $35.375 on Friday and Alltel's stock dropped $2.125 to $45.81 after a news report said a deal was imminent.
The deal will be accounted for as a pooling of interests. The companies did not immediately comment on how the deal will affect earnings going forward.
Both companies primarily serve mid-size cities and smaller communities. The complementary strategies, geographic fit and administrative synergies will allow the combined company to reduce costs by more than $100 million by the year 2000, the companies said.
"Alltel and 360 share a strategic objective to offer bundled communications services throughout tightly focused geographic markets," Dennis Foster, 360 president and chief executive officer, said.
Foster will become vice chairman of the combined company, while Joe Ford, Alltel's current chairman and chief executive officer, will continue to hold those titles.
The combined company will have $4.5 billion in annual revenues, $8.6 billion in assets and more than 20,000 employees.
The deal, which is expected to close by midsummer, is subject to shareholder and regulatory approval. Following a transition period, the merged company will operate from Alltel's headquarters in Little Rock, Ark., and will market its products under the Alltel brand.
Alltel provides wireless, wireline, long-distance and Internet services to 3 million customers in 14 states, and information services to financial and communications companies in 47 countries.
360 provides wireless communications to 2.6 million customers in more than 100 markets in 15 states. 360 also offers residential long-distance and paging services.
