Vodafone and Zegona closing in on Spanish deal

Source: Vodafone

Vodafone is close to selling a stake of at least 50% and potentially 100% of its Spanish operation to UK-based ‘buy-fix-sell’ investor Zegona Communications, according to reports by Bloomberg and Spanish press.

Bloomberg was first to report an impending deal that would value Vodafone España at €5 billion (US$5.3 billion), citing unnamed sources.

Bloomberg said that the two firms were in the process of finalizing a deal that could be announced in the coming days, with Zegona beating out private equity rivals.

Spanish daily Cinco Días said that a syndicate of banks could contribute €3 billion, with Vodafone providing a vendor loan of €500 million.

The paper reported that one option could be a 50-50 structure involving a reverse takeover. Zegona has already said that a deal would take the form of a reverse takeover, meaning that Zegona would need to apply for readmission of its shares on the London Stock Exchange.

While Bloomberg reported that the deal could involve a stake of at least 50% of Vodafone’s Spanish unit, financial daily Expansión reported that Zegona was finalizing a 100% acquisition for €5.1 billion with Vodafone prepared to loan the UK outfit €900 million to close the deal.

Zegona Communications, the former part-owner of Spanish cable operator Euskaltel, confirmed last month that it was in talks to buy Vodafone España.

Zegona confirmed to the London Stock Exchange that it is in discussion with Vodafone about acquiring the Spanish operation, and with banks in relation to its filing.

During Vodafone’s last quarterly earnings call, CEO Margharita Della Valle said “structural change” was very much necessary in Spain in the context of market conditions. She said the company was “considering a range of options” but it was too early to comment on these.