Alltel pursues CenturyTel

This week Alltel (www.alltel.com) made clear that it desires a power position in the rural wireless and wired sectors. On Thursday, the company held a teleconference to discuss a CenturyTel (www.centurytel.com) merger proposal and how the proposed deal would affect both companies.

According to Alltel, the merger would create a rural wireless powerhouse nearly twice the size of U.S. Cellular (www.uscc.com), the next largest rural wireless competitor. The new company would initially boast 7.6 million customers and estimated revenues of $4.3 billion.

Within the past month, Alltel has twice approached CenturyTel about a possible merger, and both times, CenturyTel’s board declined the offer. However, Scott Ford, Alltel president and chief operating officer said Alltel hopes CenturyTel will reconsider.

Alltel values its offer at more than $9 billion, including assumed debt. The deal would give shareholders an option of $43 per share in cash or 0.6934 Alltel shares, subject to proration. The offer, according to Alltel, represented 40% more than CenturyTel’s closing stock price on Aug. 14 and 46.8% more than its average stock price during the past six months.

“We can find no reason that this transaction would not be of interest to the Century board and its management team. At this juncture though, they don’t seem interested in talking to us,” Ford said. “We think we’ll just sit here for a little while and hope that upon further and full reconsideration on their part, that we would be able to enter into a friendly, negotiated transaction.”

CenturyTel issued a fiery response to Alltel’s public overtures. In an announcement that it was considering selling its wireless operations, CenturyTel said, “Last week CenturyTel’s board unanimously rejected Alltel’s unsolicited merger proposal, after full and appropriate consideration and advice from its financial and legal advisors.”

CenturyTel also said it questioned Alltel’s motives in prematurely revealing CenturyTel’s possible sale of its wireless operations.