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Alltel Corp. resolved its hostilities with CenturyTel Inc. on Tuesday, at least temporarily giving up on its fight for all of its rival by buying a portion of the company’s wireless business for $1.65 billion. As part of the deal, Monroe, La.-based CenturyTel will drop its lawsuit against Little Rock, Ark.-based Alltel and Alltel will withdraw its nearly $6 billion offer for all of CenturyTel. “This closes an interesting chapter in the history of Alltel and CenturyTel’s relationship,” said Scott T. Ford, Alltel president. “We have gone from maybe a rough start to a position where we’ve built some real friendship. … That is worth mentioning given the history of the ins and outs of how we got here.” Alltel, the largest U.S. provider of rural telecommunications services, has agreed to a one-year standstill in which it will not make any offers for CenturyTel. The deal also includes minority partnerships in cellular operations and PCS licenses in Wisconsin and Iowa. Alltel, of Little Rock, Ark., went public in August with an offer it made privately to CenturyTel, though it acknowledged then that the chances of a deal were remote. “CenturyTel is clearly not interested in selling” the entire company, and the bid had a low chance of success, said Dmitry Khaykin, a telecom analyst with Gabelli & Co. “I don’t know if any hostile bid could succeed there.” The unusual one-year moratorium began Tuesday, he noted, adding that it was CenturyTel that approached Alltel in May about a sale. Because their wireless footprints do not overlap, the purchase is good strategically for Alltel, he said. Merrill Lynch & Co. and Bank of America Corp. will finance the Alltel acquisition of more than 700,000 wireless subscribers in Arkansas, Louisiana, Michigan, Mississippi, Texas and Wisconsin and its pending purchase of Kentucky rural telephone lines Verizon Communications Inc. The two acquisitions together will mean about $1 billion, or a quarter of the two deals’ total value, in new issues of equity or equity-backed securities. Alltel last year agreed to buy about 600,000 rural telephone lines in Kentucky from Verizon for $1.9 billion. In October CenturyTel cut its own deal, agreeing to pay $2.159 billion to Verizon for 675,000 rural telephone lines in Alabama and Missouri, giving the Monroe, La., company a total of about 2.5 million rural access lines. CenturyTel chief financial officer R. Stewart Ewing Jr. said the company would use the proceeds to pay for the Verizon purchase, leaving less than $900 million still to be financed, possibly through an equity offering of about $325 million. CenturyTel filed a shelf registration March 14 to offer up to $3 billion in securities. The sale agreement, expected to be complete in about five months, must pass federal antitrust review and requires Federal Communications Commission approval for a handover of the spectrum licenses. Merrill Lynch & Co and Stephens Inc. advised Alltel. Bank of America and Merrill assisted with financing. J.P. Morgan and Lehman Brothers Inc. advised CenturyTel. Shares in both companies fell in what was generally a positive session Tuesday. Alltel shares slipped 3.25 percent to $54.85. CenturyTel declined 1.41 percent to $33.55. Copyright (c)2002 TDD, LLC. All rights reserved.

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