Orange and Massmovil have closed their merger agreement in Spain, which began on 8 March and means the company is valued at €18,600 million, of which 7,800 correspond to Orange and 10,900 correspond to Masamovil, As explained by both in a statement set.
The operation, still pending approval from the National Markets and Competition Commission, is expected to close during the second half of 2023.
In the statement they state that the combination of Orange Spain and Massamovil’s operations will form a 50% “joint venture”, managed jointly by the two with equal governance rights.
The agreement includes the right to activate a public offering (IPO) for sale after a specified period under certain conditions agreed upon by both parties and in such a scenario, Orange has the option to take control of the combined entity at the price of the said IPO. Is. ,
The merger will create “a sustainable actor with sufficient financial capacity and scale that will allow it to continue investing and ensure the future of competition in infrastructure in Spain for the benefit of consumers and companies”, the note states, and Investing in FTTH and 5G.
Analysis or “due diligence” has shown the potential for synergies in excess of EUR 450 million per year from the fourth year after the closure of operations, and a loan package of EUR 6,600 million without shareholder recourse.
The debt will be financed with a payment of €5,850 million to shareholders of Grupo Orange and Massmovil, a distribution that reflects the different levels of indebtedness of the two companies separately.
This loan package is mainly composed of bank loans provided by a group of banks, and the loan that MásMóvil will maintain in the new company.
Following the conclusion of operations, the agreed financial policy includes a leverage target of 3.5 times EBITDA or gross operating profit as a ratio of net debt to take the company public.
Orange’s CEO, Christel Heidem, has shown his satisfaction at the conclusion of a deal that “paves the way for the creation of a single strong operator, which will allow investments in 5G and fiber, benefiting customers across Spain.” “.
His counterpart at Massmovil, Meinrad Spanger, stressed that the agreement will create “a strong operator with a sustainable business model and the ability to invest in infrastructure, technology and talent around the world”.