France Telecom to Buy Orange From Vodafone

France Telecom said on Monday that it had agreed to acquire British mobile phone company Orange from Vodafone AirTouch (VOD Quote) for 25.1 billion pounds ($37.7 billion) and would combine Orange with its other wireless units ahead of an initial public offering by early next year.

Under the terms of the deal, France Telecom will also assume 1.8 billion pounds of Orange debt.

France Telecom said in a statement that it would combine Orange with Itineris and its other wireless businesses under the name New Orange.

The newly formed company, which is expected to have around 30 million subscribers by the end of the year, will be listed in London, Paris and New York in late 2000 or early 2001.

France Telecom expects that, on a pro forma basis, New Orange would have had consolidated revenues of around 8 billion euros ($7.49 billion) in 1999. The deal is also seen as giving the French company a foothold in Britain, Europe's second-largest telecommunications market.

"The acquisition of Orange and the creation of New Orange is a major step in France Telecom's international strategy to become a European leader and global player," said Michel Bon, chairman and chief executive of France Telecom.

France Telecom expects the transaction to be neutral to earnings on an EBITDA basis in 2001 and accretive thereafter.