The European Commission has until 16 October to finish its Phase I review of Hutchison Whampoa’s (SEHK:0013) bid to acquire British operator O2 from Telefónica (BMAD:TEF) and merge it with rival Three.
The European Commission has until 16 October to finish its Phase I review of Hutchison Whampoa’s (SEHK:0013) £10.3bn (US$15.3bn) bid to acquire British operator O2 from Telefónica (BMAD:TEF) and merge it with rival Three.
The Hong Kong group lodged its application on Friday, hours after TeliaSonera and Telenor abandoned a similar tie-up in Denmark following opposition by the European watchdog.
That had been seen as a test case, given that it was the first four-to-three mobile consolidation transaction to be scrutinised by the EC’s new competition commissioner, Margrethe Vestager. She has publically stated concerns about the number of network operators per market. Her predecessor Joaquín Almunia had established a framework focused on MVNO remedies. As such, the previous commission had allowed deals in Austria, Ireland and Germany, prompting hopes for ongoing consolidation.
It remains to be seen how the EC will view a reduction of players in larger markets like the UK and Italy, two markets in which Hong Kong’s Hutchison is looking to merge with rivals.
Vestager advised Reuters not to draw conclusions based on the collapse of the Denmark deal.
The Phase I assessment is likely to result in an in-depth Phase II investigation, as has been the case with all recent proposed four-to-three deals.
Hutchison and Telefónica have said they expect to close their UK merger in mid-2016, following a binding agreement signed in March. Hutchison will pay an initial £9.25bn at closing, and a further £1bn providing the cash flow of the combined Three-O2 reaches a certain threshold.
HSBC and Moelis advised Hutchison while Telefonica worked with UBS.