Vodafone to acquire Ono for $10 billion
Vodafone has agreed to acquire Spanish cable company Ono for $10 billion (7.2 billion euros). Vodafone made a similar agreement last year to acquire German cable operator Kabel Deutschland for €7.7 billion. Vodafone will now intensely compete against Telefónica of Spain and Deutsche Telekom of Germany in the high-speed broadband market to existing cellphone and fixed-line customers in the European countries.
“Demand for unified communication products and services has increased significantly over the last few years in Spain, and this transaction – together with our fiber-to-the-home build program – will accelerate our ability to offer best-in-class propositions in the Spanish market,” stated Vodafone CEO Vittorio Colao.
Vodafone made a tentative offer for Ono last week before the company’s annual meeting. Vodafone was given access to Ono’s financial records as a result. Ono’s shareholders approved the process of beginning with an IPO for the company at the meeting.
Private equity firms Providence Equity Partners, CCMP Capital Advisors and Thomas H. Lee Partners are the shareholders behind Ono. Apparently the shareholders preferred to a larger rival over a listing on the Madrid stock exchange. Ono’s earnings before taxes, depreciation, and amortization declined 8.8% to €686 million from the previous year. Ono has around 1.5 million broadband customers and around 1 million telephone customers. The fiber-optic services are offered to around 7.2 million homes.
“As part of Vodafone, Ono will continue to seize new growth opportunities and deliver the quality that our customers expect,” added Ono chairman José María Castellano. “The enlarged business is also expected to drive innovation in the Spanish telecommunications industry.”
Vodafone is going to finance the deal through existing cash and debt. Vodafone said that the British company is expected to generate savings of around €240 million annually before integration costs. The transaction is expected to be completed in Q3 and is subject to regulatory approval.
[Source: NY Times]