French communications and entertainment group Vivendi has signed an agreement with UK-based Vodafone to acquire Vodafone's 44 percent stake in French fixed and mobile operator SFR for EUR 7.95 billion. The sale price comprises EUR 7.75 billion, or 6.2 times SFR's 2010 EBITDA of EUR 3.97 billion, and EUR 200 million of cash expected to be generated between 1 January and 1 July 2011, to be paid as a final dividend from SFR on completion of the transaction. The agreement is subject to customary competition approvals and the transaction is expected to be completed by the end of June. SFR and Vodafone have also agreed to extend their commercial cooperation for another three years. Vivendi chairman and CEO Jean-Bernard Levy said the group was pleased to reach its strategic objective of owning 100 percent of SFR, which will help it focus on profitable growth, innovation and industrial developments. The transaction will create a significant increase in Vivendi's adjusted net income, enabling it to raise its dividend. Vodafone will return EUR 4.5 billion of the net proceeds to shareholders by way of a share buy-back after completion, with the remainder used to reduce its debt. Vodafone CEO Vittorio Colao said the sale of the SFR stake at an attractive multiple is a significant step in the group's strategy of realising maximum value from non-controlled assets. He added that by returning GBP 4 billion to shareholders, Vodafone was increasing its current buy-back programme to GBP 6.8 billion, or more than 7 percent of its market capitalisation. Vodafone's shareholding in SFR contributed GBP 573 million to its adjusted operating profit in the financial year to 31 March 2010, and GBP 284 million in the six months to 30 September 2010.
