French operator Iliad is continuing its European expansion with an agreement to acquire Polish operator P4, trading under the Play brand. Iliad has signed a binding agreement to purchase a 40 percent controlling interest from Play’s two reference shareholders for PLN 39 per share, which will give Iliad the majority of seats on Play’s management board. It will launch a public bid for the remaining Play shares at the same price, for a total price of EUR 2.2 billion, or EUR 3.5 billion including debt.
At PLN 39 per share, the offer represents a premium of 38.8 percent over the most recent closing share price; a premium of 44.7 percent over the volume-weighted average share price for the last 7 days; and a premium of 32.9 percent over the volume-weighted average share price for the last 30 days. Play's board said it supports the offer and also issued a fairness opinion obtained from JP Morgan.
The deal remains subject to clearance from the relevant regulatory authorities and notification of the planned acquisition will be submitted to the European Commission. The public bid is expected to start in mid-October and run for a month.
While the most recent entrant on Poland's mobile market, Play is the largest with 15 million customers, giving it a 29 percent market share. The company generated EUR 1.6 billion in revenues and EUR 523 million in adjusted EBITDA last year.
The acquisition will be financed by debt and cash, and Iliad expects Play to add to EPS and free cash flow from the first year. While the takeover will increase Iliad's debt leverage for 2.2x to 3.2x, the company pledged to focus on gradually reducing the debt after the takeover. It also plans to continue the process started by Play to sell of some of its passive infrastructure.
Thomas Reynaud, Iliad’s Chief Executive Officer, said that the transaction will make Iliad the sixth-largest telecom operator in Europe, with 41 million subscribers in France, Poland and Italy, and offer new opportunities for growth in Poland. Play is expected to benefit from Iliad's expertise in furthering its expansion to the fixed market in Poland, as well as developing its digital sales channels.
