As part of the deal, Vodafone will provide a brand licence agreement that will allow Zegona to use the Vodafone brand in Spain for up to 10 years post the completion of the acquisition and will offer certain services to Vodafone Spain for a total annual service charge of about €110m
Vodafone to divest its Spanish business to Zegona in €5bn deal. (Credit: Triplec85/Wikimedia Commons)
Zegona Communications has agreed to take full ownership of Vodafone Holdings Europe (Vodafone Spain) in a deal with an enterprise value of €5bn.
According to the terms of the binding agreements forged with Vodafone Europe, Zegona will pay a minimum of €4.1bn and up to €900m in the form of redeemable preference shares (RPS).
As part of the deal, Vodafone Group will provide a brand licence agreement that will allow Zegona to use the Vodafone brand in Spain for up to 10 years post the completion of the acquisition.
Besides, Vodafone Group will offer certain services to Vodafone Spain for a total annual service charge of approximately €110m.
Both parties also plan other transitional and long-term arrangements for services including access to procurement, internet of things (IoT), roaming and carrier services.
Vodafone CEO Margherita Valle 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.”
Through the acquisition of Vodafone Spain, Zegona aims to transform its business to offer exceptional service to customers as well as attractive returns for investors.
The company also intends to enhance its efficiency by reducing complexity and driving productivity.
Zegona intends to finance the acquisition through a combination of new debt, Vodafone financing and a new equity raise.
The firm has secured a debt financing of €4.2bn and a revolving credit facility of €500m. It intends to raise equity of up to €600m from third-party investors before the completion of the deal.
Furthermore, Vodafone will provide up to €900m in financing.
Zegona chairman and CEO Eamonn O’Hare said: “This financially attractive acquisition marks our third deal in Spain after successful turnarounds at Telecable and Euskaltel.
“With our clearly defined strategy and proven track record, we are confident that we can create significant value for shareholders.”
Subject to certain approvals being obtained from Zegona’s shareholders and regulatory clearances, the deal is anticipated to be completed in Q1 2024.