Alltel Corporation (NYSE:AT) jumped over 4% in today's trading on rumors that the company could be the subject of a bidding war between private equity groups and other interested parties. Rumors began after the Wall Street Journal broke the news that various private equity groups were exploring the possibility of leveraged buyout of Alltel. While an Alltel spokesman refused to comment, the WSJ said that the company was attractive due to its low debt and strong balance sheet - enabling its bidders to utilize a substantial amount of debt in the event of a leveraged buyout.

Meanwhile, Stifel Nicolaus added to the conversation by noting that a buyout has been a key part of the company's strategy since it spun off its wire line assets earlier this year. The analyst also said they believed the company was a very attractive takeover target not only for private equity, but also larger competitors Verizon Wireless (NYSE:VZ) and Sprint/Nextel (NYSE:S). Overall, Stifel Nicolaus said it valued the company's shares as high as $85 in the event of a leveraged buyout, and would continue to retain its buy rating on the stock with a price target of $68 per share.

In the end, we know that Alltel could see a bidding war between private equity and other larger carriers; it would be a strategic acquisition for larger competitors like Verizon or Sprint, while it's low debt makes it attractive to private equity groups with deep pockets. Combined, these factors make for an interesting story that is definitely worth following in the coming months!

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