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Vodafone Said to Move Closer to Ono Deal as IPO Delayed

Vodafone Group Plc (VOD) and Grupo Corporativo Ono SA’s owners are moving closer to a takeover agreement after the Spanish cable company delayed plans for an initial public offering, according to people familiar with the matter.

The two parties are negotiating outstanding details and an agreement could be announced as early as March 17, said two of the people, who asked not to be identified because the talks are private. The deal could still fall apart and Ono is keeping the IPO option open, they said. The Newbury, England-based company previously offered about 7.2 billion euros ($10 billion), including debt, for Ono, one person said yesterday.

Ono, Spain’s biggest cable company, postponed an announcement of the intention to float and investor meetings from this week to next week as it negotiates with Vodafone, said one of the people yesterday.

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Discussions between Vodafone, the world’s second-largest mobile-phone company by subscribers, and Ono’s shareholders are focused on agreeing on a price, especially the equity value of the deal, as well as compensation for completion risks such as antitrust issues and the cost of upgrading customers or networks, the person said yesterday. Madrid-based Ono has net debt of about 3.3 billion euros.

Vodafone is also requesting a guarantee from Ono’s main investors that the Spanish firm’s budget for 2014, including investments and earnings targets, is achieved because it may take several months for the deal to win antitrust approval and for Vodafone to take full control of the asset, one person said.

Vodafone and Ono representatives declined to comment.

Vodafone shares declined 1 percent to 222.2 pence in London.

The British company may try to pre-empt the start of an IPO process with an offer before Ono’s management roadshow begins later this month, two of the people said yesterday. Ono expects a valuation of 7 billion euros to 8 billion euros in an IPO, people familiar with the matter said last month.

European Assets

Vodafone is buying broadband and cable assets across Europe as it works to expand beyond wireless service. The company agreed to buy Germany’s Kabel Deutschland Holding AG last year for 7.5 billion euros. Chief Executive Office Vittorio Colao said last month that the company has $30 billion to $40 billion in “spending power” after selling its stake in U.S. mobile company Verizon Wireless.

Ono’s key shareholders include Providence Equity Partners, Thomas H. Lee Partners, CCMP Capital Advisors LLC and Quadrangle Capital Partners, which hold about 54.4 percent of Ono.

Ono reported today a 2013 net loss of 25 million euros, which compares with net income of 52 million euros a year earlier. Earnings before interest, tax, depreciation and amortization fell 8.8 percent to 686 million euros.

To contact the reporters on this story: Manuel Baigorri in Madrid at mbaigorri@bloomberg.net; Amy Thomson in London at athomson6@bloomberg.net; Kiel Porter in London at kporter17@bloomberg.net

To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net Robert Valpuesta

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