By Elena Vardon

 

Vodafone Group has agreed to sell its Spanish unit to European telecommunications investment company Zegona Communications for an enterprise value of around 5 billion euros ($5.31 billion).

The U.K.-based telecommunications group on Tuesday said the deal is for 100% of Vodafone Spain.

The consideration is for at least EUR4.1 billion in cash and up to EUR900 million in redeemable preference shares, Vodafone said. The shares will be redeemed no later than six years after the closing of the transaction for an amount made up of the subscription price and accrued preferential dividend, it said.

As part of the deal, the companies entered an agreement for Vodafone to provide certain services to Vodafone Spain for a charge of around EUR110 million a year. They will also enter a brand license agreement that allows Zegona to use the Vodafone brand in Spain for up to 10 years after the completion of the transaction. Other potential arrangements for services include access to procurement, "Internet of Things," roaming and carrier services, Vodafone said.

"We are very excited about the opportunity to return to the Spanish telecoms market," Zegona Chief Executive Eamonn O'Hare said.

Zegona said it entered into committed debt financing of EUR4.2 billion and a committed revolving credit line of EUR500 million to fund the acquisition, along with the EUR900 million in financing provided by Vodafone. It also intends to raise between EUR300 million and EUR600 million in equity from institutional investors at GBP1.5 for each new share.

The transaction--which constitutes a reverse takeover--is set to complete in the first half of 2024, subject to certain approvals from shareholders and regulatory clearances. Zegona said it its targeting completion in the first quarter and that trading in its shares remains suspended pending the publication of a prospectus on the acquisition.

"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," Vodafone Chief Executive Margherita Della Valle said. The group will review how to best use the proceeds from the sale at completion, it said.

 

Write to Elena Vardon at elena.vardon@wsj.com

 

(END) Dow Jones Newswires

October 31, 2023 04:19 ET (08:19 GMT)

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