Telefonica all set to acquire O2 |
|
|
Published
:
Mon, 31 Oct 2005 17:05
|
Spanish telecom company Telefonica SA said it has agreed to takeover the UK mobile operator O2 for 17.7 billion pounds (293 million euros). This will help the Spanish company to spread its wings into the UK and German markets.
Telefonica will pay 200 pence per share which a s 22% premium on Friday’s closing price of 164.25 pence.
Cesar Alierta, Telefonica chairman, said: “[02's] integration in the Telefonica group will enhance our growth profile, it will allow us to gain economies of scale, it will open the group to the two largest European markets with sizeable critical mass and it will balance our exposure across business and regions.”
While making this offer, Telefonica has agreed to the board of O2 that the company would continue to retain its existing brand and will be based in the UK.
As of now O2 is doing good business in the UK, Germany and Ireland, while Telefonica holds its sway over Latin America and Spanish markets. With a customer base of 145 million, Telefonica employs 173,000 staff in places from where it operates. Recently, Dutch firm KPN and Deutsche Telecom had evinced interest in buying O2.
O2 chief executive Peter Erskine said: "This transaction brings together two companies which are growing strongly with highly complementary geographical activities." Erskine added: “It's also good for customers. They have no overlapping territory, so they will be able to offer our customers better roaming and better services around the world.”
O2 was a part of BT until it became an independent listed company in 2001. It employs 15,000 people and caters to 25 million customers in Britain, Ireland and Germany. In the financial year ending March, pre-tax profits of nearly £1.8 billion were posted on revenues of nearly £6.7 billion.
Telefonica expects that the deal would enhance its earnings per share and it would be able to generate an annual operating cost of estimated 293 million euros and so also capital expenditure synergies by 2008.
Telefonica, which is world’s fifth largest mobile phone group, expected this deal to be completed by January 2006. Meanwhile, O2 shareholders were promised an interim dividend at the beginning of December.
|
|
|
|
|
|
Print this Story
