Spanish Cable Provider ONO Moves Ahead With IPO Plan

Grupo Corporativo ONO SA, Spain's largest cable company, is moving ahead with a plan to pursue an initial public offering, snubbing an approach by Vodafone Group Plc for a possible acquisition.

Directors didn’t discuss any takeover offer at a meeting yesterday, the Madrid-based company said in a statement. The company’s private-equity shareholders will meet on March 13 to approve the listing plan, it said.

The Spanish company foresees a valuation in a range of 7 billion euros ($9.5 billion) to 8 billion euros, based on the price Liberty Global Plc paid to take full control of Dutch broadband firm Ziggo NV last month, according to people familiar with the matter, who asked not to be named because the deliberations were private. Directors also signed off on the ONO’s full-year earnings yesterday.

The decision to pursue a share sale comes even as Vodafone has been courting ONO’s major shareholders about a possible acquisition, people familiar with the companies’ plans said this month. ONO is one of Europe’s few remaining major cable assets available after Vodafone acquired Kabel Deutschland Holding AG and Liberty Global bought Virgin Media Inc. last year.

“I would not exclude Vodafone engaging in last minute negotiations with ONO’s shareholders,” said Henri Alexaline, a fixed-income investor who helps manage $1 billion at FM Capital in London. “It’s all down to valuation at this point and Vodafone has both the firepower and likely synergies to justify paying a full price, which could be north of 8 billion euros.”

Vodafone Interest

A spokesman for Vodafone declined to comment today.

“This process has further to run as I expect Vodafone’s interest to still be alive,” said Guy Peddy, an analyst at Macquarie Group Ltd. in London.

ONO plans to list immediately before Easter if everything goes to plan, one of the people said. That may give any potential suitors a time frame of about four weeks before the process begins.

The company’s top shareholders include Thomas H. Lee Partners, Providence Equity Partners, CCMP Capital Advisors LLC and Quadrangle Capital Partners. The four private equity firms hold 54.4 percent of ONO, according to its website.

Vodafone is adding broadband and TV services to its mobile platform across Europe. The Newbury, England-based carrier’s Spanish market has been one of the worst performing, and the company last week reported a 14 percent slide in service revenue in the country for last quarter.

Service Bundles

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 and Jazztel Plc intensified. Its net debt at the time was 3.3 billion euros.

As cable providers accelerate offers of combined broadband, phone and television services, Numericable SAS of France and its shareholder Altice NV have raised more than $2.6 billion in separate initial share sales in recent months. Both stocks are trading above their offer prices.

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