Euskaltel SA, the phone and broadband carrier that operates in Spain’s Basque region, surged in Madrid after it agreed to buy R Cable y Telecomunicaciones Galicia SA in a deal valued at 1.16 billion euros ($1.3 billion) to expand in the north of the country.
Euskaltel offered shareholders in R Cable, which is known as Grupo R, cash and new shares for a valuation multiple of 10.9 times earnings before interest, taxes, depreciation and amortization, the company said in a statement. The deal is subject to due diligence and approval by competition authorities, Euskaltel said. Grupo R is part-owned by CVC Capital Partners.
The combined group would have more than 715,000 residential and business customers and the companies will continue to operate under their original name in their home regions. The takeover comes as Spain’s economy recovers from a years-long economic slump. The acquisition is also part of an industry-wide consolidation process in the country, after Vodafone Group Plc bought Ono and Orange SA bought Jazztel Plc last year.
“The transaction makes important strategic sense as a key step for the consolidation of cable operators in northern Spain,” Euskaltel Chief Executive Officer Alberto Garcia Erauzkin and Grupo R Chairman Honorato Lopez said in a joint statement.
Euskaltel shares rose as much as 14 percent, and advanced 11 percent to 11.33 euros at 2:22 p.m. in Madrid on Friday. The stock has gained 19 percent since its debut in the Spanish capital this month.
The enlarged company will have revenue of 570 million euros and Ebitda of 265 million euros,’’ Euskaltel said.