Vodafone Group Plc (VOD) has approached Grupo Corporativo ONO SA’s owners about a potential acquisition as the cable company meets this week to discuss an initial public offering or a sale, people familiar with the matter said.
Vodafone has contacted Madrid-based ONO’s main shareholders about a possible purchase, said the people, asking not to be named because the matter is private. A bid by Newbury, England-based Vodafone will probably have to be in the range of 7 billion to 8 billion euros ($9.5 billion to $11 billion) to win the board’s backing, based on feedback from recent investor meetings for a share sale, said one of the people.
ONO is one of Europe’s few remaining major cable assets following Vodafone’s acquisition of Kabel Deutschland Holding AG and Liberty Global Plc’s purchase of Virgin Media Inc. last year. As cable providers accelerate offers of combined broadband, phone and television services, Numericable SAS (NUM) of France and its shareholder Altice NV have raised more than $2.6 billion in separate initial stock sales in recent months.
“Spain is one of the markets where we see convergence is more advanced,” Vodafone Chief Executive Officer Vittorio Colao said in an interview in New York today. “It’s one of the markets we clearly are looking at,” Colao said, while declining to comment on ONO.
Ben Padovan, a spokesman for Vodafone, also declined to comment, as did Estefania Somoza, a spokeswoman for ONO. Bloomberg News reported Jan. 26 that Vodafone is seeking to acquire ONO and that a deal may be announced in a few weeks.
Colao said Vodafone will have between $30 billion and $40 billion in “spending power” after the company closes the $130 billion sale of its stake in Verizon Wireless on Feb. 21. “This will allow incredible transformation of Vodafone,” Colao said.
Vodafone was unchanged today in London trading, closing at 222 pence. The stock has lost 6.3 percent this year.
ONO’s directors, scheduled to meet on Feb. 11, plan to hire banks for the IPO by early March, depending on which can come up with a superior proposal to reorganize its debt to lower financing costs, two of the people said. A share sale could take place by April, they said.
The company’s top shareholders include Thomas H. Lee Partners, Providence Equity Partners, CCMP Capital Advisors and Quadrangle Capital Partners. Spokesmen for Providence and CCMP declined to comment. Representatives for Thomas H. Lee and Quadrangle couldn’t be reached for comment.
Vodafone has presented a bid for ONO, Expansion earlier reported, without saying where it got the information.
As Spain overcomes an economic slump, more companies are preparing stock offerings and foreign investors are buying assets in the euro region’s fourth-largest economy. Odigeo, the online travel agency owned by Permira Advisers LLP and Ardian, is planning an IPO in the first half of this year, people familiar with the matter have said.
Vodafone, the world’s second-largest wireless carrier, behind China Mobile Ltd., last week reported a 14 percent slide in quarterly revenue in Spain, one of its weakest markets.
ONO added 9,000 Internet customers and 183,000 mobile subscriptions in the fourth quarter after putting more emphasis on selling bundles of TV, Internet and phone service. It lost 17,000 TV customers during the period.
The company’s nine-month earnings before interest, taxes, depreciation and amortization fell 6.3 percent to 529 million euros, as competition with Telefonica SA (TEF) or Jazztel Plc (JAZ) intensified. Its net debt at the time was 3.3 billion euros. The company hasn’t released detailed financial results for the fourth quarter.