Vodafone negotiating EUR 6 bln acquisition of Spain's Masmovil - report

Vodafone has begun talks to acquire Spain’s Masmovil with the three private equity funds who have just taken it over, according to unnamed sources cited by business daily El Economista. The transaction values Masmovil at around EUR 6 billion, including EUR 2 billion in debt, and would result in Spain’s third largest operator acquiring the country’s fourth. Market sources consulted in the report said a consolidation of Spain’s leading operators is “inevitable” in view of an increasingly crowded market that expanded to 5 nationwide domestic operators earlier this year with the launch of Euskaltel’s Virgin Telco brand.

The news comes just a week after the Lorca Telecom BidCo consortium of buyout funds KKR, Cinven and Providence acquired 86.41 percent of Masmovil’s shares in a public tender offer that valued the company at EUR 3 billion. Earlier this week, the funds launched a sustained purchase order to acquire the 13.59 percent of Masmovil shares not currently owned by Lorca ahead of a Masmovil board meeting on 26 October to approve the company’s stock market delisting.

The sources said the talks are at an early stage but that Vodafone intends to anticipate other potential interested parties to recover its position as the country’s second largest operator ahead of Masmovil’s main network partner Orange. Vodafone declined to comment on the report while Masmovil subsequently issued a statement denying “any interaction whatsoever” with its rival in relation to a potential corporate transaction.

A year ago Masmovil was forced to issue a statement denying a report published by online news site El Confidencial that it was itself planning to acquire Vodafone Spain for EUR 6 billion. Masmovil’s offer was reportedly rebuffed by Vodafone, which requested EUR 8 billion for its Spanish unit, with sources at the time indicating that consultancy firm McKinsey even drew up a strategic plan estimating potential synergies of EUR 2 billion.