Orange and MásMóvil have entered into exclusive negotiations to combine their operations in Spain.
According to the companies, the resulting entity would be a 50/50 joint venture valued at €19.6 billion, with Orange Spain and Masmovil (LORCA JVCO) worth €8.1 billion and €11.6 billion respectively.
Orange and LORCA JVCO would have equal voting rights in the resulting combined entity. Accordingly, neither Orange nor LORCA JVCO would consolidate the combined entity in their accounts.
Significantly, the agreement between the parties contemplates (1) the right to launch a Public Offer for Sale (OPV) under certain conditions agreed by both parties and (2) the right of Orange to take control and consolidate the resulting combined entity in the event of an OPV. In no event would Orange be required to exit the resulting combined entity or to exercise those options.
The joint venture would integrate the assets and equipment of both companies in Spain, relying on their highly complementary business models, to serve 4.0+3.1[3] million fixed customers (of which 3.0+2.6 are convergent), 11.5+8.7 million postpaid mobile customers and almost 1.5 million TV customers.
The joint venture would generate significant synergies that could reach €450 million from the third year after the closing of the operation.
The transaction is expected to be signed during the Q2 2022 and should be completed in Q2 2023, once the appropriate approvals are obtained from the relevant administrative, competition and regulatory authorities.
Commenting on the development, Stéphane Richard, president & CEO of Orange, said: “I am very pleased to create this joint venture with MásMóvil, taking advantage of our long and successful collaboration to become a stronger competitor, capable of making the important investments necessary to fully develop the Spanish market.. I am counting on Jean-François Fallacher and the commitment of the entire Orange Spain team to turn this opportunity into a success for both companies”.
Meinrad Spenger, CEO of MásMóvil, added: “To ensure leadership in fiber and 5G infrastructures, as well as the provision of exceptional service in Spain, we need strong operators with sustainable business models. The combination of Orange and MásMóvil would be beneficial for consumers, the telecommunications sector and Spanish society as a whole”.
Lazard has acted as financial advisor to Orange, while Goldman Sachs Bank Europe SE has worked as financial advisor and BNP Paribas has acted as debt advisor to MásMóvil.
