LONDON (The Deal) -- The U.K.'s Vodafone Group (VOD) confirmed on Monday, March 17, it has agreed to pay 7.2 billion EUROS ($10 billion) for private equity-backed Grupo Corporativo Ono SA, the Spanish leader in high-speed broadband, as the buyer continues its transformation from a wireless services provider into an integrated communications company.
The deal comes after Vodafone CEO Vittorio Colao convinced Ono owners including Thomas H. Lee Partners, Providence Equity Partners, CCMP Capital and Quadrangle Capital Partners to sell it the business rather than list the company in an IPO after the British company raised its offer from a bid a source said last week most recently stood at 6.7 billion euros. It follows Vodafone's 7.7 billion euro takeover of almost 80% of Kabel Deutschland Holding AG in October and reflects the buyer's push to consolidate its position in its mainland European markets by adding new ways of reaching consumers. The takeover is Vodafone's first since the $130 billion sale of its 45% stake in Verizon Wireless to Verizon Communications closed in February.
"What we are really doing is optimizing our spending," CEO Colao told analysts. "At the end of the day it is about value creation and about long-term strategic consistency with our vision for the future. It is another step in the evolution of a mostly mobile Vodafone to a unified communications player."
Vodafone said the Ono acquisition will generate cost and capital expenditure synergies of 240 million euros by the fourth full year before integration costs, and deliver revenue benefits of 1 billion euros. The takeover will boost adjusted earnings per share from the first full year, the Newbury, England company added.