by Max Brantley
Here's the latest from WSJ:
The buyout train may be approaching Alltel station.
The wireless company, which has a market cap of $22.5 billion and has been exploring strategic options, including a leveraged sale, for months, is more likely that not to do some kind of a deal, at least if the credit default swap and stock markets are to be believed. According to a Banc of America research report yesterday that we got our hands on this morning, the rise to record levels of Alltel CDSs — instruments through which traders can bet on the future creditworthiness of companies — indicates that the market is putting the odds of some kind of a deal at 60%.
Meanwhile, Alltel’s stock has stayed at the elevated peak of more than $65 a share it reached following this Wall Street Journal article last week that reported on the private-equity groups that have formed to chase the company. (The stock closed at $65.63 Wednesday.) The company’s cancellation of executive appearances at a number of conferences, including a wireless industry powwow, has fed speculation that a deal is coming. The BofA analyst, David Barden, says that in a buyout Alltel could fetch $71 a share.
Of course, a buyout to groups such as the one that includes Blackstone Group and Providence Equity Partners isn’t a foregone conclusion, especially since Alltel is clamping down on the amount of debt any such buyer can put on the company. But even if it doesn’t pursue a sale to a buyout firm or another phone company — such as AT&T, Verizon Communications or Sprint Nextel (BofA thinks the odds of that are just 10%) — Alltel could do its own version of a leveraged buyout, loading up on debt to make a big payment to shareholders including the family of CEO Scott Ford.