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Alltel eyeing 360 Comm
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March 13, 1998: 6:08 p.m. ET
Telecom services firm seen buying wireless services provider for $5 billion
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NEW YORK (CNNfn) - Alltel Corp. is close to an agreement to acquire 360 Communications Co., industry sources said Friday.
The Little Rock, Ark.-based telecommunication services company is prepared to pay as much as $40 a share, valuing 360 Communications of Chicago at nearly $5 billion, according to published reports.
In addition, Alltel likely will need to assume nearly $1.8 billion of 360 Communications long-term debt, giving the transaction a total price of about $6.8 billion.
Word of the deal drove shares of 360 (XO) skyward, rising 5-13/16 to 35-5/8 in unusually heavy trading. Alltel's stock (AT) lost 2-1/8 to 45-13/16.
As a result of the heavy trading, the New York Stock Exchange has requested comment from both companies. Officials of Alltel and 360 Communications have declined to comment.
At the anticipated price tag of $40 a share, some analysts believe Alltel is getting a relative bargain. That price values the target company at 12.5 times its estimated cash flow for 1998 - less than the multiple of recent private transactions, said Thomas Lee, analyst at Salomon Smith Barney.
Lee said rumors about a possible combination have circulated for some time.
Still, regardless of the price, most analysts generally believe the two companies are a very good strategic fit.
"They complement each other very well. Alltel has PCS properties that complement the 360 region," another analyst who requested anonymity said.
360 Communications -- spun off from the long-distance telecommunications giant Sprint -- is the nation's second-largest publicly traded wireless voice and data services company. It offers wireless services to 2.6 million customers in 15 states. Alltel also offers telephone services, mainly in the Sunbelt states.
-- from staff and wire reports
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