Basque cableco Euskaltel (BME: EKT) has agreed a deal to merge with Galicia-based R Cable, valuing the latter at €1.155m (US$1.265bn).
Euskaltel said in a statement that the enterprise value of R Cable, majority owned by private equity firm CVC,…
Basque cableco Euskaltel (BME: EKT) has agreed a deal to merge with Galicia-based R Cable, valuing the latter at €1.155m (US$1.265bn).
Euskaltel said in a statement that the enterprise value of R Cable, majority owned by private equity firm CVC, represents a multiple of about 10.9x EBITDA.
Euskaltel, the largest broadband and Pay TV provider in the Basque Country in terms of customer numbers, will pay primarily in cash, but also issue new shares.
The combined company will have pro forma revenues of €570m and EBITDA of €265m, Euskaltel said. Its network will stretch about 725,000km and serve more than 715,000 residential and corporate customers. The cablecos will retain their own brands, local structures and management teams.
This marks the latest consolidation deal in the Spanish telecoms sector following French incumbent Orange’s takeover of Jazztel last September and UK-based Vodafone’s acquisition of cableco Ono in March.
Euskaltel – which began trading on the Madrid, Valencia, Bilbao and Barcelona stock exchanges in July – stressed that it has many cultural and strategic affinities with R Cable, saying both “are deeply rooted in their respective regions and benefit from a strong customer base as a result of [their] focus on high-quality, bilingual customers services (Spanish, Basque and Galician) and a differentiated and innovative product offering”.
Mobile is at the heart of both companies’ strategies, Euskaltel added, noting that they provide high-speed internet access via their fibre optic networks, WiFi hotspots, and 4G spectrum licences.
The agreement will see shareholders in R Cable, the leading telco in Galicia, become investors in Euskaltel. Kuxtabank will retain a 25% stake in Euskaltel.
The deal has been approved by both companies’ boards of directors but is subject to the successful completion of due diligence and regulatory approvals.
