Alken Asset Management, the second-largest shareholder in Jazztel, has dismissed the $4.4 billion takeover bid made for the Spanish fixed operator as too low, said Expansion.
The investment firm, which holds a five per cent stake in Jazztel, thinks the €13 per share offer represents an undervaluation. It is holding out for €20.
Alken argues Orange’s offer puts too low a figure on the synergies on offer from a combination between the two operations.
Orange yesterday said the combined entity would generate up to €1.3 billion in synergies but the investment firm said €3 billion is a more realistic figure.
The €3 billion figure is composed of €1 billion from Orange, the country’s third-largest mobile operator, and €2 billion from Jazztel, a leading fixed player and MVNO.
Alken’s view contrasts with that of investment bank Macquarie Capital, which this morning published a note stating that Orange is “a victim of heightened expectations” and has “overpaid by around €1 billion, in our view.”
Alken argues that among the positive factors resulting from the deal would be a reduction in the number of competitors in the Spanish market, which would reduce pricing pressure and lower customer retention cost.
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.
Leading shareholder and chairman Leopoldo Fernandez Pujals, who holds 14.5 per cent of the share capital, has already made a commitment to participate in the offer.
Other executive members of Jazztel’s board, CEO Jose Miguel Garcia Fernandez, and Jose Ortiz Martinez, its general secretary, have also agreed to the offer.