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The deal is the second large transaction for Vodafone’s new CEO Margherita Della Valle since she assumed the role in April
Today, Vodafone has announced that it has entered into a binding agreement with Zegona Communications to sell 100% of Vodafone Spain.
Under the terms of the agreement, Vodafone will receive €4.1 billion in cash and €0.9 billion in redeemable preference shares.
The news comes after anonymous sources speaking to Bloomberg recently confirmed that the two firms were close to inking the deal.
Discussions between the two parties were reportedly initiated back in September.
“The sale of Vodafone Spain is a key step in right-sizing our portfolio for growth and will enable us to focus our resources in markets with sustainable structures and sufficient local scale. I would like to thank our entire team in Spain for their dedication to our customers and relentless determination to improve our organic performance. However, the market has been challenging with structurally low returns,” said Vodafone CEO Margherita Della Valle in a statement.
“My priority is to create value through growth and improved returns. Following the recently announced transaction in the UK, Spain is the second of our larger markets in Europe where we are taking action to improve the Group’s competitiveness and growth prospects.”
Della Valle was made permanent CEO in April, and since then, the firm has announced numerous large scale changes to their operations, including the merger of Vodafone UK with Three UK and cutting 11,000 jobs globally.
“We are very excited about the opportunity to return to the Spanish telecoms market. This financially attractive acquisition marks our third deal in Spain after successful turnarounds at Telecable and Euskaltel. With our clearly defined strategy and proven track record, we are confident that we can create significant value for shareholders,” said Eamonn O’Hare, Zegona’s Chairman and CEO, in a company statement.
The takeover is expected to close in the first half of next year.The Spanish mobile operator market is notoriously competitive, with Vodafone struggling to hold its own against market leader Movistar alongside Orange and MasMovil. Della Valle’s predecessor, Nick Read, had long hoped that market consolidation would be the answer, which was shattered after the merger of Orange and MasMovil was announced last year.
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