Orange Spain and Grupo MásMóvil announced this Saturday the merger of operations, which means the creation of the largest Spanish telecommunications company in number of customers, more than 27 million lines between mobile and fixed broadband. Telefónica Spain will maintain its top spot in the Spanish revenue and EBITDA ranking, according to data from the last quarter
Under the terms of the agreement, the capital of the new company will be split equally between the two groups, with an asset valuation of the joint venture nearly 18,600 million euros. The chairman and chief financial officer will report to Orange, while the post of CEO will correspond to the general manager of the MásMóvil group, Meinrad Spenger.
The merger of Orange Spain and MásMóvil will initially have no impact on the customers of the different brands of the two groups (Orange, Jazztel Simyo, on the one hand, and MásMóvil, Yoigo, Pepephone, Llamaya, Lebara , Hitsmobile). All of these brands will continue to operate as before, regardless of the visual identity of the new joint venture.
In the viewfinder of the new company, the landing on the stock exchange in 2025 stands out, through a public offer of sale (OPV), a time in which the venture capital funds that control the capital of MásMóvil -KKR. Cinven and Providence Equity- will have the possibility of valuing an investment of approximately 5,300 million euros made in November 2020. As of the aforementioned IPO, Orange has reserved the right to take control of the joint -venture, without this decision being binding.
From now on, the reinforced company begins its particular pilgrimage with the European competition authorities, the journey of which could end during the second quarter of 2023. In the best case, the regulators will give their particular approval subject to conditions, which will give result in compensation from the resulting company to the rest of the operators, including alternatives such as Adamo and Avatel.
The work of Orange and MásMóvil officials was intensive long before the start of the merger agreement was announced on March 8, with the ensuing period of exclusive negotiations. Thus, over the past four months, companies have had time to examine opponents’ accounts in detail (due diligence). In addition, the due diligences revealed potential synergies of more than 450 million euros per year from the fourth year after the closing of the operation.
They also reached an agreement with a dozen banks to formalize a financing of 6,600 million euros, corresponding to the debt inherited from MásMóvil. This figure will finance, among other issues, a payment of 5,850 million euros to the shareholders of the two groups.
In recent months, the initial valuations of the two groups have also been adjusted, so that the value of Orange Spain is set at 7,800 million euros (7.2 times 2022 EBITDA) and 10,900 million euros. euros (8.7 times 2022 EBITDA) that of MásMóvil (including Euskaltel), including the aforementioned debt of 6,600 euros.