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Orange and MásMóvil have agreed to a €18,600 million merger to consolidate their operations in Spain.

Orange and MásMóvil announced this Saturday an agreement to combine their operations in Spain, creating a joint venture worth 18,600 million euros, according to a statement from both entities.

Specifically, the resulting entity will take the form of a “joint venture” controlled by Orange and Lorca JVCo, the British parent company of MásMóvil, 50%, with equal management rights. The combined entity is valued at €18.6 billion, €7.8 billion for Orange Spain and €10.9 billion for MásMóvil.

In terms of revenue, the new company will achieve a turnover of 7,300 million euros and an adjusted gross operating profit of approximately 2,200 million euros.

The transaction is subject to the approval of competition authorities as well as other relevant authorities and is expected to be completed in the second half of 2023.

A statement from both entities emphasized that the joint venture, which will bring together complementary businesses such as MásMóvil and Orange, will lead to significant efficiencies that “will allow us to accelerate investments in FTTH and 5G, which will benefit. consumers. the Spanish people.”

The agreement between the parties includes the right to activate an offer for public sale (OPV) on certain terms agreed upon by both parties after a period specified by both parties and, in such a scenario, Orange has the option to take control of the combined entity at a price. The said Offer to Public Sale (OPV).

Due diligences, which have been carried out since last March, have shown the potential for synergies of more than 450 million euros per year in the fourth year since the closure of the operation.

In addition, the transaction is supported by a debt package of €6,600 million without recourse to the shareholder, which will, among other things, finance a payment of €5,850 million to the shareholders of Grupo Orange and MásMóvil.

In this sense, this distribution to shareholders will be asymmetric, as it involves a rebalancing of the cost of capital in favor of Orange to reflect the different levels of debt of the two companies separately. This debt package consists mainly of bank debt secured by a “fund” of banks. MásMóvil’s existing debt will remain with the new company.

Orange CEO Christel Heidemann believes that the creation of this new company “is of fundamental importance for the Orange group, the Spanish telecommunications market and our customers”.

For his part, the CEO of MásMóvil, Meinrad Spenger, emphasized that together with Orange they intend to establish “a strong operator with a sustainable business model and the ability to invest in infrastructure, technology and talent worldwide”. “We expect this operation to promote competition, digitization and innovation in the Spanish market,” he added.

Source: El Diario





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