After a period of exclusive negotiations that began in early March, Orange and MásMóvil have signed a binding agreement to merge their activities in Spain.
The transaction, which is based on an enterprise value of €18.6 billion – €7.8 billion for Orange Spain and €10.9 billion for MásMóvil (including the acquisition of Euskaltel) – is subject to the approval of the competition authorities and other competent administrative authorities and should close no later than H2 2023.
The merger will result in a 50/50 joint venture co-controlled by the two companies. In addition, the agreement provides for a right to trigger an IPO under certain conditions for both parties after a defined period and, in such event, an option for Orange to take control of the combined entity at the price of l ‘Initial Public Offering.
The due diligences carried out since March show potential synergies in excess of 450 million euros per year to be achieved by the fourth year following closing.
The transaction is supported by a €6.6 billion non-recourse debt package which will fund, among other things, a €5.85 billion upfront payment to Orange Group and MásMóvil shareholders.
Commenting on this agreement, Christel Heydemann, CEO of Orange, said: “I am very pleased to announce today the conclusion of these negotiations. This agreement paves the way for the creation of a joint company that combines the strengths of Orange and MásMóvil into a single, stronger operator that will enable investments in 5G and Fiber, benefiting customers throughout Spain. I firmly believe that the creation of this new company is of fundamental importance for the Group, the Spanish telecom market and for our customers”.
Meinrad Spenger, CEO of MásMóvil, added: “This is a great day for Spanish consumers as well as for our stakeholders. With Orange, we plan to form a strong operator with a sustainable business model and the ability to invest in world-class infrastructure, technology and talent. We expect this to drive competition, digitalization and innovation in the Spanish market”.