Vodafone has raised its offer for Spanish cable operator Ono to EUR 7 billion including debt and has reached a preliminary agreement to buy the company, reports Reuters citing unnamed sources close to the matter. Ono is said to have opened its books to allow Vodafone to initiate an accelerated due diligence process ahead of its shareholders meeting on 13 March. However, until Vodafone makes a firm offer to all shareholders, Ono intends to continue working on alternative plans for an IPO, which is due to be formally presented at the 13 March meeting. The Spanish operator previously rebuffed offers of EUR 6 billion and EUR 6.5 billion as too low and the sources suggest that Vodafone’s revised bid will have to be substantially higher to persuade Ono’s shareholders to drop the flotation.
In fact, according to one of the sources, an offer would have to be in line with recent cable deals in the Netherlands, where Liberty Global agreed to pay 11.3 times EBITDA for Dutch rival Ziggo, and Germany, where Vodafone paid 11.9 times EBITDA for Kabel Deutschland. Ono’s EBITDA for 2012 was EUR 752 million, so applying an 11 times multiple on it would translate to a Vodafone bid of around EUR 8.2 billion.
Earlier reports suggested that Liberty Global would compete with Vodafone for Ono, which is Spain’s largest cable operator. Ono posted a EUR 15 million loss in the nine months to September 2013 but the company’s extensive fibre network, which covers around 7 million households, remains an attractive asset for operators such as Vodafone looking to expand into high-margin data services. Ono currently has around 1.7 million residential cable customers, 1.35 million internet customers and over 1 million mobile customers.
