Vodafone Group agreed to pay €7.2 billion to acquire Spanish cable service provider Ono following weeks of speculation about a deal taking place.
Ono appeared to be heading for an IPO but after a week of discussions, and an improved offer from Vodafone, the Spanish company has had a change of heart.
A €7 billion offer appeared to have been rejected in February when an Ono board meeting featured no discussion of the offer and instead focused on plans for an IPO. Ono also received shareholder approval for an IPO last week.
However, it was also reported Friday that Ono had slowed its IPO plans to discuss a possible sale to Vodafone, after it received the improved offer.
A previous report said a meeting between Ono’s shareholders and Vodafone Group CEO Vittorio Collao was held at the beginning of March, with due diligence taking place to make the offer binding.
The acquisition strengthens Vodafone’s quad-play effort in Europe in which it wants to provide mobile and fixed services, along with broadband and TV. Its €7.7 billion acquisition of Kabel Deutschland in October last year was also part of this strategy.
Ono has around 1.9 million customers across Spain and is the market leader in high-speed broadband, as well as offering pay TV services.
The UK-based company said it sees “a significant opportunity to accelerate growth in unified communications products and services” through its distribution and marketing capabilities and cross-selling. Revenue synergies are estimated at a total net present value of around €1 billion.
Vittorio Colao, Vodafone’s CEO, said demand for unified communications products and services has increased significantly in Spain over the past few years and the transaction, along with its fibre-to-the-home programme, “will accelerate our ability to offer best-in-class propositions in the Spanish market”.
Jose Maria Castellano Rios, chairman of Ono’s board of directors, added that as part of Vodafone, Ono “will continue to seize new growth opportunities” while the enlarged business is expected “to drive innovation in the Spanish telecommunications industry”.