Former Virgin Media finance head Eamonn O’Hare’s Zegona Communications (LSE: ZEG) has agreed to buy northern Spain’s Telecable for €640m (US$705m).
Zegona, set up to acquire and operate TMT businesses in Europe, is buying the cableco from…
Former Virgin Media finance head Eamonn O’Hare’s Zegona Communications (LSE: ZEG) has agreed to buy northern Spain’s Telecable for €640m (US$705m).
Zegona, set up to acquire and operate TMT businesses in Europe, is buying the cableco from private equity firm The Carlyle Group (NASDAQ: CG) and local bank Liberbank (BME: LBK). It will fund the purchase with £251m (US$390m) of new equity backed by institutional investors, proceeds from its recent IPO and a new debt facility arranged by Goldman Sachs, according to a company statement.
This marks the latest consolidation deal in the Spanish telecoms sector. Last week, cableco Euskaltel agreed to buy R Cable in a deal valuing the Galicia-based target at €1.16m (US$1.27bn) and, last year, Vodafone acquired Ono and Orange bought Jazztel.
O’Hare, who was CFO at Virgin Media before its takeover by Liberty Global, said he believes there is “a significant opportunity” to develop Oviedo-based Telecable, which provides television, fixed and mobile phone and broadband services.
“By combining the local knowledge of the team in Spain with the international experience and track record of Zegona, we have the right leadership to drive Telecable forward and deliver its full potential.”
He described the target, which claims to have more than 162,000 residential and corporate customers, as a strategically strong business with considerable opportunity for top-line growth and returns. Zegona plans to leverage its Virgin Media heritage and Telecable’s high-speed fibre network to make the telco a “fierce competitor” in the Spanish market, he added.
Zegona, whose largest shareholder is Marwyn Value Investors, expects the deal to close in August.
Goldman Sachs acted as exclusive financial adviser to Telecable, The Carlyle Group and Liberbank. JP Morgan Cazenoveacted as joint bookrunner and joint broker, BNP Paribas was M&A financial adviser, Oakley Capital was joint bookrunner and Cenkos Securities was joint bookrunner, nominated adviser and joint broker.
Goldman Sachs acted as bookrunner of the term loan facility to help fund the transaction, which will be provided by its merchant banking division. BNP Paribas was bookrunner of the revolving credit facility and is agent of the debt facilities.
Telecable reported revenues of €131m and EBITDA of €63m in 2014.
At the time of writing, Zegona’s shares were up 12.5% on the London Stock Exchange to £153.
