Alltel Corporation (AT), the nation’s fifth-largest cell-phone provider (largest in terms of geographic area) announced Sunday night it has agreed to a deal to be acquired by the private investment firms TPG Capital (formerly Texas Pacific Group) and Goldman Sachs Capital as part of a $27.5 billion deal.
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The deal would constitute the largest acquisition of a wireless company by a private equity firm. The purchasing price will be around $71.50 per share for the Little Rock based wireless company. The price constitutes a premium of 23% over Alltel’s year-end price, when the first rumors of the deal were announced, and 10% over Friday’s $65.21 closing price.
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Prior to the deal being finalized, it must first be approved by Alltel’s shareholders and by U.S. regulators. The company expects the deal to go through by March of 2008.
Alltel’s chief executive, Scott Ford, has been quoted as saying the buyout price is “a 10% premium over a price that clearly anticipated this outcome.” He also stated in a press release, “This transaction delivers substantial and certain value to our shareholders while providing the company with long-term partners who share our commitment to our customers, employees and the communities we serve. This transaction also ensures our customers can continue to rely on Alltel to deliver high-quality service and leading edge products and services.”
Ford stated Alltel, a company with 12 million subscribers and 15,000 employees, has no plans for any immediate staffing changes.
This PowerOptions blog entry is an example of how the average investor can identify the most attractive option trade based on their view of whether a stock will rise or fall. If an investor’s view is bullish, they might choose to use a covered call investment strategy, bull call debit spreads or bull-put credit spreads to make money off their hunch. If an investor believes a stock will fall, they might choose bear put debit spreads or bear-call credit spreads.
Potential Trades:
This may be a hot period for telecom and wireless with several mergers brewing and an overall bullish trend in the sector. Below we take a look not only at Alltel but several other attractive investments we found using PowerOptions patented technologies.
All of the following option trades have 64 days until expiration. These trades were discovered using the powerful suite of option search tools found at PowerOptions.
| PowerOptions covered call search Telecom and Wireless Sectors (64 days) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
OPTION | Strike Info |
Opt Bid |
% Dnsd. Prot. |
% If Unch. |
% If Asgnd |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AT | $65.21 | ATGM | 07 JUL $65.00 | $2.90 | 4.40% | 4.30% | 4.30% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TWTC | $18.30 | JMQGW | 07 JUL $17.50 | $1.55 | 8.50% | 4.50% | 4.50% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| VIP | $99.69 | VIQGT | 07 JUL $100.00 | $6.10 | 6.10% | 6.50% | 6.80% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CHU | $15.15 | CHUGC | 07 JUL $15.00 | $0.95 | 6.30% | 5.60% | 5.60% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AT
AT – Alltel Corp. ALLTEL Corporation provides wireless voice and data communications services to individual and business customers in the United States. This trade involves the July $65 call option and offers 4.4% downside protection and 4.3% potential profit if the stock is above the $65.00 strike price at the end of the option period. The stock is currently trading at $65.21.
Competitors for AT include: Sprint Nextel Corp. (S), AT&T Mobility LLC (private), Cellco Partnership (private), BellSouth Corp. (BLS), and CenturyTel Inc. (CTL).
TWTC
TWTC – Time Warner provides managed voice and data networking solutions to business customers and organizations in the United States. This trade involves the July $17.50 call option and offers 8.5% downside protection and 4.5% potential profit if the stock is above the $17.50 strike price at the end of the option period. The stock is currently trading at $18.30.
Competitors for TWTC include: AT&T Inc. (T), Qwest Communications International Inc. (Q), and Verizon Communications Inc. (VZ).
VIP
VIP – Vimpel Communications provides wireless telecommunications services in Russia, Kazakhstan, Ukraine, Uzbekistan, and Tajikistan. This trade involves the July $100 call option and offers 6.1% downside protection and 6.8% potential profit if the stock is above the $100.00 strike price at the end of the option period. The stock is currently trading at $99.69.
Competitors for VIP include: Golden Telecom Inc. (GLDN), Mobile Telesystems OJSC (MBT), and Rostelecom OAO (ROS).
CHU
CHU – China Unicom Ltd offers cellular, international and domestic long distance, and data and Internet services in China. This trade involves the July $15 call option and offers 6.3% downside protection and 5.6% potential profit if the stock is above the $15.00 strike price at the end of the option period. The stock is currently trading at $15.15.
Competitors for CHU include: China Mobile Communications Corporation (private), China Netcom (Group) Company Limited (private), China Telecommunications Corporation (private), China Telecom Corp. Ltd. (CHA), China Telecom Limited ADR (CHL), China Netcom Group Corp. (Hong Kong) Ltd. (CN), and Hutchison Telecom. Intl. Ltd. (HTX).
For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions‘ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.
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PowerOptions‘ sister company PowerOptionsApplied provides expert stock option trading recommendations. PowerOptionsApplied specializes in covered calls, naked puts and iron condor stock options strategy recommendations. PowerOptionsApplied provides a 30-day risk free trial of its service.
[tags] TPG Capital, Texas Pacific Group, Goldman Sachs Capital, Scott Ford, AT&T Mobility LLC, Cellco Partnership, China Mobile Communications Corporation, China Netcom (Group) Company Limited, China Telecommunications Corporation, AT, ALLTEL Corp., CHA, China Telecom Corp. Ltd., CHL, China Telecom Limited ADR, CN, China Netcom Group Corp. (Hong Kong) Ltd., CTL, CenturyTel Inc., GLDN, Golden Telecom Inc., HTX, Hutchison Telecom. Intl. Ltd., MBT, Mobile Telesys. OJSC ADR, Q, Qwest Comm. Intl., S, Sprint Nextel Corp., T, AT&T Corp., VZ, Verizon Wireless, bear put debit spreads, bear-call credit spreads, bull call debit spreads, bull-put credit spreads, covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]