Stephane Richard, CEO of Orange, is holding out against any call for the French group to sweeten its €3.4 billion offer for Spain’s Jazztel, according to an interview with El Pais.
Richard was emphatic: “At this point I want to be very clear: there will be no price increase. The price we offered is very attractive to shareholders. The premium to Jazztel’s share price is 67 per cent compared to the end of 2013 and in terms of multiples, the transaction is also at a high level”.
However, Aitken Asset Management, the second largest shareholder in Jazztel, is arguing the €13 per share offer should be closer to €20. Among other factors it has highlighted how combining Orange – now the second largest operator in Spain – with a leading fixed player will boost margins.
In response, Richard points to the decision by leading shareholder and chairman Leopoldo Fernandez Pujals to throw his 14.5 per cent in Jazztel behind the bid.
“Also, do not forget that the offer is 100 per cent cash. Of the fourteen analysts who have examined the conditions, thirteen say it is an attractive offer,” added Richard.
The takeover tender process has not yet been launched.
Orange needs the support of shareholders with at least 50.01 per cent of its capital, excluding shares for which an irrevocable undertaking agreement has been signed. Aitken Asset Management holds a five per cent stake.
Orange is eager to build a quadplay strategy in Spain to match rivals Telefonica and Vodafone.
Richard was quizzed on whether Orange should have moved sooner for Jazztel. “It is now easy to say that,” he answered, pointing to recent developments in the Spanish market including Vodafone buying Ono; the acceleration towards convergence and into SIM-only deals; the development of the fibre market; and some improvement in the wider Spanish economy.
“All this means that now is the right time.” he said.
Finally, he was asked if Orange might want to hoover up Yoigo, the country’s fourth largest operator, which is also up for sale.
“Here I want to be clear, right now we are going to focus on closing the acquisition of Jazztel, and then its integration. For us Yoigo is not a priority.”