The European Commission (EC) has launched an in-depth antitrust probe into Orange’s planned €3.4bn (US$4.4bn) takeover of Spanish fixed-line operator Jazztel.
The French incumbent submitted a number of remedies on 13 November to persuade the EU…
The European Commission (EC) has launched an in-depth antitrust probe into Orange’s planned €3.4bn (US$4.4bn) takeover of Spanish fixed-line operator Jazztel.
The French incumbent submitted a number of remedies on 13 November to persuade the EU regulator to approve the deal; however, the EC has considered them insufficient to dispel its concerns.
In a statement today, the EC said that, although the merged entity would not be in a dominant position, it had “concerns that the proposed transaction may lead to a significant loss of competitive pressure for fixed internet access services and fixed-mobile multiple play offers”.
It also added that the merger, which would reduce the number of local fixed-line players from four to three, could lead to price increases for Spanish consumers.
Orange currently provides both mobile and fixed services in Spain.
Furthermore, the EU regulator expressed concerns that the deal “would change the merged entity’s incentive to exert significant competitive pressure on the remaining two nationwide competitors, namely incumbent operator Telefonica and Vodafone”.
Vodafone acquired Spanish cableco Ono for €7.2bn in July.
The EC will further assess the deal’s implications over the next 90 working days and will come to a decision by 24 April 2015.
According to the statement, the Spanish competition authority requested a referral of the case on 5 November, which is still pending.
Orange first announced its intention to acquire Jazztel on 16 September, offering €13 per share in cash for 100% of Jazztel, which represented a 34% premium on the volume-weighted average closing price over the previous 30 trading days.
The offer valued Madrid-listed Jazztel at 8.6 times its projected 2015 EBITDA, taking expected synergies into account, Orange said at the time.
Orange, which owns Spain’s third-largest mobile operator, estimates the combined entity will generate up to €1.3bn in global synergies, largely due to savings in operational expenditure and network investments.
Commenting on the EC’s decision, the Paris-based telco said in a statement that it maintains its ambition to close the operation during the first half of 2015.
“The Orange Group continues proceedings for the acquisition of Jazztel and reaffirms its confidence in the favourable outcome of this deal, which aims to give rise to the market’s second-ranked fixed broadband operator and one of the most dynamic players in the Spanish mobile market.”
