Ono Shareholders Agree to Sell Company to Vodafone
Vodafone to Pay Just Over €7 Billion for Ono
MADRID— Vodafone Group VOD.LN -1.00% PLC has reached an agreement with shareholders of Ono SA to buy the Spanish cable company for just over seven billion euros ($9.73 billion) including debt, people with knowledge of the deal said Sunday.
Vodafone has struggled to compete in Spain with Telefonica SA, Jazztel SA and other companies that offer packages combining high-speed home Internet, pay-TV and mobile phone service. Reuters The purchase agreement, which is to be announced Monday and will require regulatory approval, is part of a drive toward consolidation among Europe's fragmented array of operators and would add a much-needed fixed-line operation to Vodafone's Spanish unit. The deal followed weeks of negotiations and pre-empted a long-planned initial public offering of Ono stock.
The U.K. telecom giant plans to assume Ono's €3.34 billion debt and pay the remainder in cash to Ono's shareholders, who are led by a group of U.S. investment funds, said one person knowledgeable about the deal.
Vodafone has struggled to compete in Spain with Telefonica SA, TEF.MC -1.22% Jazztel SA JAZ.MC +0.39% and other companies that offer packages combining high-speed home Internet, pay-TV and mobile phone service. Vodafone's Spanish mobile unit has suffered falling service revenue, contracting margins and high churn levels.
Observers said that Vodafone, Europe's largest telecom firm by market value, had few options to benefit from Spain's nascent economic recovery other than a purchase of Ono.
By acquiring Ono, Vodafone is following a strategy it used in Germany last year when it became an integrated provider through the purchase of cable network operator Kabel Deutschland for €10 billion, including debt.
Ono reported Friday that its revenue rose 1.6% in 2013, to €1.6 billion from €1.57 billion in 2012, as the company swung to a €25 million net loss from a €52 million net profit the previous year.
The company added has 1.87 million retail customers, down 4% from the close of 2012, including 811,000 high-speed Internet customers. Net debt dropped slightly from €3.44 billion at the close of 2012.
Ono's shareholders on Thursday approved plans to list shares on the Madrid stock exchange next month and targeted a company valuation of about €7 billion. But shareholder representatives continued conversations with Vodafone and reached a deal to sell the company for a slightly higher sum.