MADRID: Shareholders with a total holding of 62.72 percent of British mobile phone firm O2 gave their acceptance letters to Spanish telecoms giant Telefonica for its £17.7bn takeover offer. O2 responded today by withdrawing its minimum 90 percent acceptances condition.
The British company had earlier said it would be extending the closing date for acceptances until January 8. Today’s gesture suggested the acquisition deal was almost accepted. 60 percent of O2 shareholders had already given their approvals last month.
Besides the majority shareholder acceptances, the deal will require approval from the European Commission which is currently investigating the legality of the proposed merger. Telefonica regardless, seems confident and expects the offer to go wholly conditional before the month ends. If completed, the deal would be the second biggest acquisition of a British firm after Orange which was acquired for £31bn in 2000 by France Telecom.
O2 is a strategic investment for Telefonica as with it, the Spanish company gains access to two of Europe’s biggest cellphone markets – the UK and Germany. It had also bought nearly 5 percent of O2 shares in the secondary market. The merger talks began in October 2005 making O2 share prices surge a month later on hopes that a rival might come up with a bigger offer.
Besides the UK, O2 has a successful business in Ireland and Germany with a total subscriber base of about 25.7 million. The group’s half-year earnings impressed shareholders with a 12 percent increase in turnover, profits up 15 percent and subscriber base growing by 17 percent. The company was spun off from British Telecommunications in 2001.
Its Spanish suitor operates in 17 Spanish and Portuguese speaking countries, has 173,000 employees and a subscriber base of 145 million.