UAE’s Etisalat has entered exclusive talks with Vivendi for the acquisition of the French conglomerate’s 53% stake in Maroc Telecom.
The move could signal the end of a long-drawn sale process, first initiated in October last year.
Etisalat has…
UAE’s Etisalat has entered exclusive talks with Vivendi for the acquisition of the French conglomerate’s 53% stake in Maroc Telecom.
The move could signal the end of a long-drawn sale process, first initiated in October last year.
Etisalat has offered €3.9bn (US$5.1bn), or Dh92.6 (US$10.9) per share, for a majority stake in the Moroccan incumbent. Maroc Telecom’s shares closed at Dh99.55 (US$11.7) on the Casablanca Stock Exchange on 22 July.
On top of the €3.9bn, Etisalat will pass on a €300m of 2012 dividend payments to Vivendi.
Vivendi added in a statement that “taking into account Maroc Telecom’s net debt, the transaction is being carried out at a proportional enterprise value for Vivendi’s stake of €4.5 billion, corresponding to an EBITDA multiple of 6.2x.”
According to a Bernstein note, the value is “straight in line with the valuation the market had come to expect, but it must be underscored that it offers no change of control premium.”
The telcos have agreed a period of exclusivity, which ends on 25 September 2013. If Vivendi accepts Etisalat’s offer, the transaction will then be subject to a number of conditions, including the execution of a shareholders’ agreement with Morocco, which has a 30% stake in Maroc Telecom, and securing competition and regulatory approvals.
Etisalat said in a separate statement that, as per Moroccan capital markets regulations, it will be required to make a mandatory tender offer to the remaining shareholders in the Moroccan incumbent. Maroc Telecom has a 17% free float.
Etisalat has already secured commitment from a syndicate of local and international banks to fund the acquisition. It is understood that the operator agreed a US$8bn dual-tranche loan facility in April.
Etisalat is advised by BNP Paribas while Vivendi hired Credit Agricole and Lazard for the stake sale. Moelis & Company is advising government-owned Emirates Investment Authority, which has a stake in Etisalat.
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Etisalat was the only bidder left in the race to purchase the telco after both Qatar’s Ooredoo and South Korean KT Corp decided to withdraw their offers weeks ago, with KT citing valuation issues and Ooredoo a lengthy process.
Meanwhile, TelecomFinance has confirmed that Caisse de Depot et de Gestion (CDG), an investment vehicle for the Moroccan state, may consider buying a stake in Maroc Telecom together with Etisalat.
However, CDG cannot take a stake greater than 10% in the country’s largest mobile operator because it already controls 30% of rival Meditel.
By requiring the presence of a local investor in Maroc Telecom, Morocco is reportedly looking to ensure that the new owner of the country’s largest employer will invest heavily in telecoms infrastructure.
CDG is expected to acquire a percentage of the operator’s shares that are currently in free float.
The deal will help Vivendi to reduce its debt load. Last year, the French conglomerate had launched a comprehensive strategic review of its telecoms units.
Although it abandoned the sale of Brazilian operator GVT in lat 2012, the French conglomerate is currently eyeing an IPO of France’s SFR.
Despite the progress of the Maroc Telecom sale talks Bernstein expects Vivendi to enter “a difficult period”. The research firm commented that “a sale of GVT looks years away, an IPO of SFR requires a stabilisation of the French mobile market which may or may not happen in 2014 (and we believe there are reasons for scepticism) so that SFR may not be disposed before 2015.”
Bernstein concluded saying that if the French market continues to deteriorate in 2014, Vivendi’s share price could be impacted again. “We have long favoured a complete restructuring of the portfolio, but we acknowledge that – in the current environment – it may not be a practical possibility,” the firm said.
