Telecoms and media group Vivendi has agreed to buy the 44% stake it did not own in mobile operator SFR from Vodafone for E7.95bn.
The company said that price was split between a E7.75bn portion corresponding to a 6.2 multiple of SFR 2010 EBITDA and a…
Telecoms and media group Vivendi has agreed to buy the 44% stake it did not own in mobile operator SFR from Vodafone for E7.95bn.
The company said that price was split between a E7.75bn portion corresponding to a 6.2 multiple of SFR 2010 EBITDA and a final dividend of E200m reflecting the generation of cash between January 1 and July 1 2011.
The price is much higher than the value of E4.9bn that Vodafone had recorded for its stake in its accounts on September 30, 2010.
The exit of Vodafone from SFR will also put an end to the shareholder pact which prevented the French mobile operator from expanding internationally.
“The full ownership will give more leeway to SFR, which will be able to expand outside of France. But nothing concrete has been decided at the moment,” a Vivendi spokesperson said.
But Vivendi CEO Jean-Bernard Levy reportedly said that the full acquisition of SFR did not mean that his group would now mainly focus on telecoms. The group also operates in the music, pay-TV and video games industries.
Vivendi said it would not finance the acquisition through share issuance. The company has E3.2bn in cash and E5.9bn of undrawn credit lines. Last January, it received US$3.8bn from the sale of its stake in NBCU and E1.254bn as a settlement of legal disputes with Elektrim and Deutsche Telekom over the ownership of Polish mobile operator PTC.
The company forecasts a net debt of around E13.5bn at the end of 2011 and expects its credit rating to remain BBB.
Vivendi was advised by advised by Rothschild and Allen & Overy, while Vodafone was advised by Lazard and Linklaters.
The transaction has been long awaited. Vivendi chairman and CEO Jean-Bernard Levy had repeatedly said that his group sought to take full control of SFR, while Vodafone said last year that it was looking to offload several minority investments in foreign companies in order to return money to its investors.
Last year, the British company sold its 3.2% stake in China Mobile, and it is at the moment involved in the process to sell its 24.39% stake in Polish mobile operator Polkomtel.
Vodafone said that of E4.5bn (£4bn) of the net proceeds of SFR stake sale would be returned to shareholders via share buy-back, while the rest would be used to reduce the group’s debt.
As part of the agreement SFR and Vodafone will extend their commercial co-operation for another three years.
Levy said: “We are very pleased to reach our strategic objective to own 100% of SFR, which will help Vivendi to focus further on profitable growth and innovation. I am very confident that this will greatly benefit both the Group’s industrial development and our millions of subscribers and consumers globally. The transaction will create a significant increase in Vivendi’s adjusted net income, enabling us to raise the dividend to our shareholders.” Vodafone CEO Vittorio Colao said: “Our Board remains committed to realising maximum value from our non-controlled assets. The sale of our stake in SFR, at an attractive multiple, represents a significant further step in the execution of this strategy. In addition, we have secured a valuable partnership agreement in France which will allow us to continue to deliver compelling cross-border services to both consumer and enterprise customers across the major markets of western Europe.” The transaction is expected to complete by the end of June.
