Shares of Bellevue-based Western Wireless surged 15 percent yesterday on speculation that the company would soon be bought by rival Alltel in a $4 billion deal. The two companies would...

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Shares of Bellevue-based Western Wireless surged 15 percent yesterday on speculation that the company would soon be bought by rival Alltel in a $4 billion deal.

The two companies would not comment on the matter, raised yesterday in a New York Times report that said the deal could be hammered out within the week.

Little Rock, Ark.-based Alltel is the nation’s sixth-largest wireless carrier, and Western Wireless is a much smaller player, though one with an international presence.

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The marriage would be the latest in an industry that has been busy consolidating over the past year. Following the merger under way of Cingular Wireless and AT&T Wireless, it would also take another wireless company’s headquarters out of Puget Sound.

Western Wireless shareholders appeared pleased by the speculation. The company’s share price shot up $4.70 yesterday to close at $35.70. Alltel shares dropped $2, or about 3.5 percent, to close at $56.

The combined company would have about $10 billion in sales and 9.6 million wireless subscribers. Alltel also has 3 million subscribers in its fixed-line businesses.

When asked about Alltel’s acquisition strategy during an October conference call with analysts, Chief Executive Scott Ford was coy.



An attractive buy?




Western Wireless provides wireless services mainly in smaller markets and rural areas


Headquarters:
Bellevue


Employees (last reported count):
3,765


Chief executive:
John Stanton, 48, also chairman


Subscribers:
1.2 million in 19 states


Annual revenue:
$1.5 billion


International operations:
Owns 98 percent of Western Wireless International Holding, which provides wireless services in Slovenia, Austria, Ireland, Bolivia, Haiti, Ghana and Georgia.

Source: SEC documents


“It doesn’t take long to go through the list of who all is out there to do a quick view of what maps make sense, what balance sheets make sense,” he said, adding that the company takes those considerations “a day at a time.”



Branching out




Alltel’s subsidiaries provide both wireless and fixed-line services


Headquarters:
Little Rock, Ark.


Employees (last reported count):
19,986


Chief executive:
Scott Ford, 41, son of Chairman Joe Ford


Subscribers:
8.4 million wireless and 3 million fixed-line in 26 states


Annual revenue:
$8 billion


Shopping spree:
Announced deals in the last two months to buy wireless assets from U.S. Cellular, TDS Telecom, Cingular Wireless and Public Service Cellular.

Source: SEC documents, Alltel


Analysts were divided yesterday on whether an acquisition would make sense for Alltel. In a research note, Legg Mason analyst Christopher King wrote that the deal would give Alltel a significant presence in the western United States, where Western Wireless offers service in 19 states. The new company’s balance sheet would also remain strong, King wrote, allowing it to consider more acquisitions down the road.

In an interview, King said Western Wireless had much to gain.

“At the price that’s being bandied about, it’s a great deal for Western Wireless shareholders,” he said. “If nothing else, given the premium over where the stock was trading last night, I think that’s a significant positive return for shareholders.”

But Greg Gorbatenko, an analyst with Marquis Investment Research, said he didn’t think the deal was good for Alltel. Western Wireless makes a significant share of its money from deals allowing other wireless carriers to make use of its network. Its two largest roaming partners, AT&T Wireless and Cingular, may have less need for that network when they combine forces, Gorbatenko said.

What Alltel might really be after in the acquisition is to bring Western Wireless Chief Executive John Stanton on board, Gorbatenko said.

Stanton helped shape the wireless business in the United States, and still casts a long shadow in the industry. He built VoiceStream Wireless — now T-Mobile USA — from the ground up, and then helped sell it to Deutsche Telekom, the German telecommunications giant, for $30 billion. He also helped build McCaw Cellular Communications, which was acquired by AT&T and became AT&T Wireless.

“The guy exudes confidence,” Gorbatenko said. “He’s kind of viewed as a visionary and someone who makes things happen.”

But investing in Stanton also means investing in Western Wireless, which is overvalued and has some unstable prospects, he said.

“You shouldn’t be investing in one guy, because he could get hit by a truck,” he added.

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com