BT hopes a placing of new ordinary shares will raise approximately £1 billion towards the £12.5 billion cost of acquiring UK operator EE.
The company agreed definitive terms with EE earlier this month, with payment to be in cash and shares. The proceeds from the sale of ordinary shares will fund part of the deal’s cash element.
The placing starts today (12 February).
However, BT insists the placing is not conditional upon completion of the acquisition. If the deal falls through then the company will use the proceeds for unspecified “general corporate purposes”.
The £1 billion sum represents about three per cent of BT’s outstanding share capital.
The placing is being conducted through what BT describes as an underwritten accelerated bookbuilding process.
JP Morgan Cazenove is acting as sole global co-ordinator, joint bookrunner and joint corporate broker in connection with the placing. Merrill Lynch International is acting as joint bookrunner and joint corporate broker and Goldman Sachs International is acting as joint bookrunner .
The consideration for EE will be paid to both Deutsche Telekom and Orange, EE’s current owners. Following the deal, Deutsche Telekom will retain a 12 per cent stake in the operator, while Orange will hold onto a four per cent interest.
In its announcement about the placing, BT says its combination with EE will achieve combined operating cost and capex synergies of around £360 million a year in the fourth full year post completion of the acquisition. This is equivalent to a net present value of around £3.5 billion before integration costs or around £3 billion after integration costs.
In addition, BT expects to generate revenue synergies with a total net present value of approximately £1.6 billion.