Following a period of exclusive negotiations that began in early March, Orange and MásMóvil have signed a binding agreement to merge their operations in Spain.
The transaction, which is based on an enterprise value of €18.6 billion – €7.8 billion for Orange Spain and €10.9 billion for MásMóvil (including the acquisition of Euskaltel) – is subject to approval from antitrust authorities and other relevant administrative authorities and expected to close during H2 2023 at the latest.
The merger will result in a 50/50 joint venture co-controlled by the two companies. Furthermore, the agreement includes a right to trigger an IPO under certain conditions for both parties after a defined period and, in such a scenario, an option for Orange to take control of the combined entity at IPO price.
Due diligence conducted since March shows potential synergies in excess of €450 million per annum to be reached by the fourth year post closing.
The transaction is supported by a €6.6 billion non-recourse debt package that will finance, among other things, a €5.85 billion payment up-streamed to the Orange Group and MásMóvil shareholders.
Commenting on the agreement, Christel Heydemann, CEO of Orange, said: “I am very happy to announce the conclusion of these negotiations today. This deal paves the way for the creation of a joint company that combines the forces of Orange and MásMóvil into a single, stronger operator that will enable investments in 5G and Fibre, benefiting customers across Spain. I strongly believe that the creation of this new company is of fundamental importance for the Group, the Spanish telecoms market and for our customers”.
Meinrad Spenger, CEO of MásMóvil, added “This is a great day for Spanish consumers as well as for our stakeholders. Together with Orange, we plan to form a strong operator with a sustainable business model and the capacity to invest in world-class infrastructure, technology and talent. We anticipate this will drive competition, digitisation and innovation in the Spanish market”.