Alltel Corp. said Monday that it agreed to buy wireless service provider 360 Communications Co. for about $4.2 billion in stock, a move to create a regional niche player focused on mid-size markets.
The combined company, with about $4.5 billion in annual sales and 20,000 employees, would be a force in the Southeast and Midwest and a leader in the smaller markets often overlooked by larger telecommunications companies, analysts said.
The agreement, subject to shareholder and regulatory approval, is the latest acquisition in the $200-billion-a-year phone industry aimed at allowing companies to offer a full range of services, from local and long-distance to wireless and the Internet.
The combination would give Alltel a quick boost in its efforts to become a full-service telecom company, analysts said. The Little Rock, Ark.-based company provides Internet services to 3 million customers in 14 states and information services to companies in 47 countries.
Chicago-based 360, formerly the cellular business of Sprint Corp., serves 2.6 million customers in 15 states and offers residential long-distance and paging services.
No layoffs are expected, although some employees might be moved as operations are consolidated at Alltel’s headquarters, officials said.
The alliance would boost Alltel’s annual revenue to about $4.5 billion and give it a total of more than 5.6 million customers in 22 states. The companies expect savings of more than $100 million by 2000.
360 President and Chief Executive Dennis Foster would become vice chairman of the combined company, while Alltel’s Joe T. Ford would continue to serve as chairman and CEO.
Under the deal, each 360 share would be exchanged for 0.74 of an Alltel share. Alltel would also assume about $1.8 billion in debt, the companies said.
Alltel shares fell 94 cents to close at $44.88, and 360 lost $4.38, closing at $31.25 after rising when rumors of the deal surfaced Friday. Both stocks trade on the New York Stock Exchange.