Problem:
Verizon sought to acquire Alltel, by joining forces however; Verizon has agreed to pay $5.9 billion in addition to assuming an insurmountable debt of about $22.2 billion. The upward side to the acquisition is the wide array of consumers Verizon will acquire as a result, thus creating one of the world's largest and most successful wireless carriers in the country. The acquisition is thought of (by Verizon executives) as a means to generate substantial revenue, increased ROI (Return-On-Investment), expand globally, and acquire new consumers while retaining current consumers.
The acquisition could not have come at a more crucial time for Alltel, seeing as though the company was dealing with financial troubles as a result of a buy out from TPG Capital and GS Capital Partners (subdivisions of Goldman Sachs). Consequently, the company was having trouble with selling the debt they accumulated (as a result of the buyout aforementioned) in order to finance the acquisition. Alltel, sought assistance from various banks and were unsuccessful in their efforts, nevertheless, Verizon intercepted Alltel's search for financing and decided to pay $5.9 billion and acquire the remaining debt balance. Although, the acquisition, at first glance appeared to be more of a liability than an asset, the acquisition turned out to be a win/win for all parties involved. Alltel was able to reposition themselves in the marketplace by glomming onto a telecommunications giant in the wireless industry. Their efforts to combine forces and exchange resources allowed Verizon to strengthen their marketability and improve their status within their wireless industry.
In order for the acquisition to take effect, Verizon needed approval from regulators (the Federal Communications Commission FCC) to proceed. If Verizon desired to acquire Alltel, then they must first agree to sell operations in 105 markets where Alltel operates (Reardon, 2009). Unfortunately, this transition was a difficult one for the consumers and created a significant impact in the beginning as a result of the resistance to change. Verizon consumers were unable to receive services from Alltel stores and likewise for Alltel customers. During the transitional phase, the company was working towards improving the company's overall functionality by ensuring that consumers did not lose the level of quality they were once accustomed to.