Vodafone may have upped offer for Spain´s Ono to 7.5bn pounds

10th Mar 2014 09:35

Vodafone has reportedly reached a deal that could result in a higher purchase price than initially offered for Spanish broadband operator Ono.That follows the refusal of the Spanish telecom to entertain an initial offer of €6.9bn, having judged that the price was inadequate and stating that it would proceed with an initial public offering.In fact, until the companies involved confirm the above reports Ono continues to be expected to announced plans to file for a stock market listing that would value the company at €7bn (£5.82bn). According to Reuters, a new deal between the two was reached that would include a "bid that is substantially higher" than the original. In that same vein, the newswire further reported that Vodafone had started the necessary process of due diligence over the weekend and was expected to make an official offer before Ono holds its sharholders´ meeting on March 13th. For its part, over the weekend Spain´s leading financial daily Expansión, cited sources close to the transaction as saying that the final price could lie between €7bn and €7.5bn, or between £5.81bn and £6.3bn.If this merger were to go through, the new group would attain approximately 19% share of Spain´s broadband market (1.4m Ono clients and 0.9m Vodafone customers) and a 26% share in the mobile space, according to analysts at broker Ahorro Corporación Financiera (ACF). ACF goes on to explain that the above range of prices for the operation would imply paying between 10 and 10.7 times EV/EBITDA, which is "reasonable" in their opinion if one takes into account other recent transactions in the sector including Vodafone´s offer for Kabel Deutschland (at 11.5 times) or Liberty´s bid for Ziggo (10.5 times 2014 EV/EBITDA).At 10:03 London time, Vodafone was leading the decliners on the FTSE 100, trading down 2.82% to 234.95 pence.JM/AB