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High finance



  AWall Street Journal blog item suggests that an up-and-down credit market could have implications for the proposal to take Alltel private.

Another big leveraged buyout that has caught Deal Journal’s eye is Alltel. The mobile-phone company agreed in May to be bought by private-equity duo Goldman Sachs and TPG for about $27 billion, or $71.50 a share. While the stock quickly ran up to $69.60, it has since fallen more than $2 to close at $67.55 Friday. Given that the deal is expected to close in about six months, that is a spread of nearly 12% in its own right. (To be sure, part of the decline in the stock could reflect a growing realization among investors that a competing bid isn’t likely to emerge.)

Still, Alltel typifies what’s prying arbitrage spreads open. The buyers of the company need to raise $23 billion to finance the deal sometime this summer. (See this post we did last week for more detail on the big upcoming LBO-related debt financings and this story from the Wall Street Journal today for more on how the M&A boom might be affected by the credit markets.) With the leveraged-credit markets suffering a bout of indigestion, there is likely fear among some in the equity-arb community that the lofty price Alltel fetched at auction no longer may be justified by the financing terms Goldman and TPG will be offered by bond and loan investors when they start pounding the pavement.

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