Zegona Communications to acquire Vodafone Spain for €5.0 billion
LONDON, UK: Vodafone Group Plc has entered into binding agreements with Zegona Communications plc in relation to the sale of 100% of Vodafone Holdings Europe, S.L.U. (Vodafone Spain).
On completion, Vodafone’s consideration will comprise at least €4.1 billion in cash and up to €0.9 billion in the form of Redeemable Preference Shares (RPS) which redeem, for an amount comprising the subscription price and accrued preferential dividend, no later than 6 years after closing
Vodafone and Zegona have entered into an agreement whereby Vodafone will provide certain services to Vodafone Spain for a total annual service charge of c.€110 million.
The enterprise value of €5.0 billion is equivalent to a multiple of 5.3x Adjusted EBITDAaL3 and 12.7x OpFCF4 for the 12-month period ended 31 March 2023
Margherita Della Valle, Chief Executive of Vodafone, said: “The sale of Vodafone Spain is a key step in right-sizing our portfolio for growth and will enable us to focus our resources in markets with sustainable structures and sufficient local scale. I would like to thank our entire team in Spain for their dedication to our customers and relentless determination to improve our organic performance. However, the market has been challenging with structurally low returns.
My priority is to create value through growth and improved returns. Following the recently announced transaction in the UK, Spain is the second of our larger markets in Europe where we are taking action to improve the Group’s competitiveness and growth prospects.”
On completion, Vodafone’s consideration will comprise at least €4.1 billion in cash (subject to customary completion adjustments) and up to €0.9 billion in the form of RPS. Zegona has fully committed debt facilities of up to €4.2 billion available to satisfy the cash consideration and intends to raise equity via an institutional placing of new Zegona shares to investors prior to completion of the Transaction, subject to market conditions.
To the extent Zegona’s equity raise prior to completion exceeds €400 million, 50% of that excess will be paid to Vodafone in cash at completion and the number of RPS received will be reduced accordingly.
Completion of the Transaction is conditional on certain approvals being obtained from current Zegona shareholders as well as regulatory clearances and is expected to take place in the first half of 2024. The Transaction is not subject to any minimum equity raise by Zegona.
Vodafone and Zegona will enter into a brand licence agreement, which permits the use of the Vodafone brand in Spain for up to 10 years post-completion. Vodafone and Zegona will enter into other transitional and long-term arrangements for services including access to procurement, IoT, roaming and carrier services.
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