TIDMZEG
RNS Number : 8350R
Zegona Communications PLC
31 October 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF THAT JURISDICTION. THIS ANNOUNCEMENT DOES NOT
CONSTITUTE A TAKEOVER OFFER OR AN OFFER OF SECURITIES. NO OFFER OR
SALE OF SECURITIES MAY OCCUR IN THE UNITED STATES UNLESS THE
TRANSACTION HAS BEEN REGISTERED UNDER THE US SECURITIES ACT OF
1933, AS AMED OR IS EXEMPT FROM REGISTRATION THEREUNDER.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION for the purposes
of Article 7 of the UK version of the Market Abuse Regulation (EU
596/2014) which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018 .
31 October 2023
Zegona to acquire Vodafone Spain for EUR5.0 billion
Zegona announces that it has entered into binding agreements
with Vodafone Europe B.V. ("Vodafone") in relation to the
acquisition of 100% of Vodafone Holdings Europe, S.L.U. ("Vodafone
Spain") for EUR5.0 billion (the "Acquisition").
-- Transaction values Vodafone Spain at an enterprise value of
EUR5.0 billion, representing a multiple of 3.9x EBITDAaL
-- Zegona will fund the Acquisition through a combination of new
debt, Vodafone Financing and a new equity raise
o Zegona has entered into committed debt financing of EUR4.2
billion and a committed revolving credit facility of EUR0.5
billion. Post equity raise the new debt facility is anticipated to
deliver a net debt position at Completion of EUR3.7 billion,
representing 2.9x leverage(1)
o Vodafone will provide up to EUR900 million financing(2)
o Zegona equity raise of up to EUR600 million from third party
investors to be executed before completion(3)
-- Vodafone Group plc will provide a brand licence agreement
which permits Zegona to use the Vodafone brand in Spain for up to
10 years post completion. Vodafone and Zegona will enter into other
transitional and long-term arrangements for services including
access to procurement, IoT, mobile roaming and carrier
services.
Eamonn O'Hare, Zegona's Chairman and CEO, said:
"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."
Vodafone Spain is strategically attractive
-- Vodafone is the No. 3 player in Spain with significant market
shares in mobile, broadband and TV
-- Scale business with significant cash flow potential: FY23
EUR3.9 billion revenue, EUR1.3 billion EBITDAaL, EUR0.4 billion
Cash Flow
-- Leading integrated operator with strong market positions in both consumer and B2B segments
-- Three strong brands and a highly converged customer base
-- Gigabit capable fixed network passing 10.7 million homes with access to c.95% coverage
-- High quality, market leading, mobile network with 4G / 5G spectrum advantage
Opportunity to deliver significant value for Zegona
shareholders
-- Transform the business to deliver exceptional service to
customers and attractive returns for investors
-- Inject highly experienced management, including the proposed
appointment of José Miguel García as CEO (ex-Jazztel and Euskaltel
CEO)
-- Improve efficiency by reducing complexity and driving productivity
-- Stabilise revenues with new commercial initiatives
Key transaction terms
Vodafone will provide financing of up to EUR900 million through
an investment in preference shares ("Vodafone Financing") in a
newly created entity, EJLSHM Funding Limited ("Newco"), which will
use the funds to subscribe for new ordinary shares in Zegona
("Ordinary Shares"). Newco will be responsible for paying the
dividends due on the Vodafone Financing and for redeeming the
preference shares. Newco will irrevocably undertake not to exercise
its voting rights in Zegona (other than in connection with a
takeover). The preference shares are transferable and are
redeemable by no later than the 6(th) anniversary of their issue.
Once the preference shares have been fully redeemed and Zegona's
shareholders have been given six months' notice, Newco's holding of
Zegona Ordinary Shares will be deferred, effectively removing them
from Zegona's capital structure. Following Newco's deferral of
Ordinary Shares, Zegona's other shareholders will receive all
incremental equity value created by the business.
To the extent Zegona's equity raise exceeds EUR400 million, 50%
of the equity raised above EUR400 million shall be paid to Vodafone
in cash at completion and the Vodafone Financing and corresponding
number of preference shares will be reduced accordingly.
Newco's shares in Zegona will rank pari passu with Zegona's
existing Ordinary Shares and the Ordinary Shares to be issued
pursuant to Zegona's equity raise.
Completion of the Acquisition is conditional on certain
approvals being obtained from Zegona shareholders as well as
regulatory clearances. Zegona is targeting completion in Q1
2024.
Equity fundraising
Zegona expects to launch an equity raise with a target of EUR300
million to EUR600 million in gross proceeds via an institutional
placing of new Ordinary Shares ("New Zegona Shares"). This is
expected to be launched prior to Completion. The Company is
proposing to issue New Zegona Ordinary Shares at GBP1.50 per share.
The equity raise is not a condition of the Acquisition. Zegona will
make a further announcement in relation to the equity fundraising
in due course.
Suspension of listing
Should the Acquisition complete, it will constitute a reverse
takeover under the Listing Rules. The Company will need to apply
for the re-admission of its shares to the standard listing segment
of the Official List and the Main Market of the London Stock
Exchange on the basis that the FCA approves the eligibility of the
Company, following completion of the Acquisition as a result of the
reverse takeover, in accordance with Listing Rule 5.6.21. As the
Company is currently unable to provide a full disclosure under
Listing Rule 5.6.15, the admission of the existing Zegona Shares to
the standard listing segment of the Official List and trading from
the London Stock Exchange remains suspended pending the publication
of a prospectus providing further detail on Vodafone Spain and the
Zegona Group as enlarged by the Acquisition.
General Meeting
Details of the general meeting of Zegona to approve various
aspects of the Acquisition and the circular to be sent to
shareholders in connection with the general meeting will be
available on Zegona's website, www.Zegona.com in due course.
Deutsche Numis is acting as lead financial advisor to Zegona.
ING Bank, UBS and UniCredit Bank also advised Zegona. Deutsche Bank
Aktiengesellschaft, ING Bank N.V., Sucursal en España and UniCredit
Bank AG are leading the financing in connection with the
Acquisition and acting as bookrunners and Deutsche Bank AG, Filiale
Luxembourg, ING Bank N.V., Sucursal en España and UniCredit Bank AG
are acting as underwriters of the debt financing. Deutsche Numis is
acting as global co-ordinator and joint bookrunner, with Canaccord,
ING and UniCredit acting as joint bookrunners in connection with
the planned equity fundraising.
Travers Smith LLP is acting as legal counsel to Zegona in
connection with the Acquisition and Milbank LLP is acting as legal
counsel to Zegona in connection with the debt funding. Allen &
Overy LLP is acting for the bookrunners and underwriters in
connection with the debt funding and Simmons & Simmons LLP is
acting for the global co-ordinator and joint bookrunners in
connection with the planned equity fundraising.
Enquiries:
Tavistock (UK Public Relations LLYC (Spain Public Relations
adviser) adviser)
Lulu Bridges Guillermo Segura
lulu.bridges@tavistock.co.uk gsegura@llorenteycuenca.com
Tel: 07831 170 364
Jos Simson Valvanera Lecha
jos.simson@tavistock.co.uk vlecha@llorenteycuenca.com
About Zegona
Zegona was established in 2015 with the objective of investing
in businesses in the European TMT sector and improving their
performance to deliver attractive shareholder returns. Zegona is
led by former Virgin Media executives Eamonn O'Hare and Robert
Samuelson and is admitted to the standard listing segment of the
Official List and to trading on the Main Market. For more
information go to www.zegona.com
About Vodafone
Vodafone is the largest pan-European and African telecoms
company. Its purpose is to connect for a better future by using
technology to improve lives, digitalise critical sectors and enable
inclusive and sustainable digital societies.
It provides mobile and fixed services to over 300 million
customers in 17 countries, partners with mobile networks in 46 more
and is also a world leader in the Internet of Things (IoT),
connecting over 160 million devices and platforms. With Vodacom
Financial Services and M-Pesa, the largest financial technology
platform in Africa, it serves more than 56 million people across
six countries.
It is committed to reducing its environmental impact to reach
net zero emissions by 2040, while helping its customers reduce
their own carbon emissions by 350 million tonnes by 2030. It is
driving action to reduce device waste and achieve its target to
reuse, resell or recycle 100% of its network waste.
Notes to announcement:
1. Zegona has EUR4.2 billion committed financing at signing.
This will be reduced through proceeds from Zegona's equity raise
which is expected to target between EUR300 million to EUR600
million in gross proceeds, with EUR3.7 billion net debt at
Completion assuming a EUR600 million equity raise. At EUR300
million equity raise, the Vodafone Financing(2) will be EUR900
million, total Zegona equity will be EUR1.2 billion and net debt at
Completion is anticipated to be EUR3.9 billion (before taking
account of other anticipated Vodafone Spain cash balances at
Completion).
2. Vodafone Financing to be provided through an investment in
preference shares into a new company which will use that financing
to subscribe for Zegona shares at GBP1.50 per share
3. Zegona equity raise target EUR300 million to EUR600 million
Defined Terms:
Banks Deutsche Bank, Deutsche Bank, Filiale Luxembourg,
Deutsche Numis, UBS, Canaccord, ING and UniCredit
Canaccord Canaccord Genuity Limited
---------------------------------------------------------
Cash Flow Cash Flow defined as EBITDAaL - Capex (excluding
license and spectrum fees)
---------------------------------------------------------
Completion completion of the Acquisition
---------------------------------------------------------
Deutsche Bank Deutsche Bank AG
---------------------------------------------------------
Deutsche Numis Deutsche Bank AG, acting through its London branch
(which is trading for these purposes as Deutsche
Numis)
---------------------------------------------------------
EBITDAaL EBITDAaL is a non-IFRS measure and is defined as
Vodafone Group plc Spain segment Adjusted EBITDAaL
adjusted to be in line with Zegona's accounting
policy relating to subscriber acquisition costs
---------------------------------------------------------
Enlarged Group the Zegona Group, as at and from Completion, as
enlarged by Vodafone Spain
---------------------------------------------------------
ING ING Bank N.V. and ING Bank N.V., Sucursal en España
---------------------------------------------------------
Newco EJLSHM Funding Limited
---------------------------------------------------------
UBS UBS AG, London Branch
---------------------------------------------------------
UniCredit UniCredit Bank AG, Milan Branch
---------------------------------------------------------
Vodafone Financing the financing to be provided by Vodafone through
an investment in preference shares in Newco, the
proceeds of which will be used to subscribe for
new ordinary shares in Zegona at GBP1.50 per share;
---------------------------------------------------------
Vodafone Spain Vodafone Holdings Europe, S.L.U. and its consolidated
subsidiaries
---------------------------------------------------------
Zegona Group the Company and its subsidiaries
---------------------------------------------------------
IMPORTANT INFORMATION
This Announcement is an announcement and not a circular or
prospectus or equivalent document and prospective investors should
not make any investment decision on the basis of its contents. A
shareholder circular containing the resolutions relating to the
Transaction to be voted on by Zegona Shareholders and a notice of
General Meeting is expected to be sent to Zegona Shareholders
today.
Neither this Announcement nor any copy of it may be taken or
transmitted directly or indirectly into or from any jurisdiction
where to do so would constitute a violation of the relevant laws or
regulations of such jurisdiction. Any failure to comply with this
restriction may constitute a violation of such laws or regulations.
Persons into whose possession this Announcement or other
information referred to herein should inform themselves about, and
observe, any restrictions in such laws or regulations.
Nothing in this Announcement constitutes an offer of securities
for sale in any jurisdiction. Neither this Announcement nor any
part of it constitutes or forms part of any offer to issue or sell,
or the solicitation of an offer to acquire, purchase or subscribe
for, any of the Company's securities in the United States, Canada,
Australia, Japan or South Africa or any other jurisdiction in which
the same would be unlawful. The securities of the Company may not
be offered or sold in the United States absent registration under
the US Securities Act, or an exemption therefrom. The securities
referred to herein have not been and will not be registered under
the US Securities Act or under the securities laws of any state or
other jurisdiction of the United States, and may not be offered or
sold, taken up, resold, transferred or delivered in the United
States except pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the US Securities
Act and in accordance with any applicable securities laws of any
state or other jurisdiction of the United States. There has not
been and will be no public offer of the Company's securities in the
United States.
'Deutsche Numis' is a trading name used by certain investment
banking businesses of Deutsche Bank AG ("Deutsche Bank"), Numis
Securities Limited and Numis Europe Limited in the United Kingdom
and Ireland, Numis Securities Limited and Numis Europe Limited are
members of the group of companies controlled by Deutsche Bank AG.
Deutsche Bank AG is a stock corporation (Aktiengesellschaft)
incorporated under the laws of the Federal Republic of Germany,
with its principal office in Frankfurt. It is registered with the
district court (Amtsgericht) in Frankfurt am Main under No HRB 30
000 and licensed to carry on banking business and to provide
financial services. The London branch of Deutsche Bank AG is
registered in the register of companies for England and Wales
(registration number BR000005) with its registered address and
principal place of business at Winchester House, 1 Great Winchester
Street, London EC2N 2DB. Deutsche Bank AG subject to supervision by
the European Central Bank (ECB), Sonnemannstrasse 22, 60314,
Frankfurt am Main, Germany, and the German Federal Financial
Supervisory Authority Bundesanstalt für
Finanzdienstleistungsaufsicht or BaFin), Graurheindorfer Strasse
108, 53117 Bonn and Marie-Curie-Strasse 24-28, 60439 Frankfurt am
Main, Germany. With respect to activities undertaken in the United
Kingdom, Deutsche Bank AG is authorised by the Prudential
Regulatory Authority (the "PRA"). It is subject to regulation by
the FCA and limited regulation by the PRA. Details about the extent
of Deutsche Bank AG's authorisation and regulation by the PRA are
available from Deutsche Bank AG on request. Numis Securities
Limited is authorised and regulated by the Financial Conduct
Authority (the "FCA") in the United Kingdom. Numis Europe Limited
trading as Numis is regulated by the Central Bank of Ireland.
UBS is authorised and regulated by the Financial Market
Supervisory Authority in Switzerland and authorised by the PRA and
subject to regulation by the FCA and limited regulation by the PRA
in the United Kingdom.
Canaccord is authorised and regulated by the FCA in the United
Kingdom.
ING is supervised by the European Central Bank (ECB), The Dutch
Central Bank (De Nederlandsche Bank) and the Netherlands Authority
for the Financial Markets (AFM). UniCredit is a universal bank with
its registered office and principal place of business in
Arabellastrasse 12, Munich, Germany. It is entered under HRB 42148
in the B section of the Commercial Register Maintained by Munich
Local Court.
UniCredit Bank AG is an affiliate of UniCredit S.p.A., Milan,
Italy (ultimate parent company). UniCredit Bank AG is subject to
regulation by the European Central Bank and Federal Financial
Supervisory Authority (BaFin). UniCredit Bank AG, Milan Branch is
regulated by Banca d'Italia, the Commissione Nazionale per le
Società e la Borsa (CONSOB) and the Federal Financial Supervisory
Authority (BaFin). Details about the extent of UniCredit Bank AG's
regulation are available on request.
Each of the Banks is acting exclusively for the Company and no
one else in connection with the Acquisition, the contents of this
Announcement or any other matters described in this Announcement.
None of the Banks will regard any other person as its client in
relation to the Acquisition, the content of this Announcement or
any other matters described in this Announcement and nor will any
of them be responsible to anyone other than the Company for
providing the protections afforded to its clients or for providing
advice to any other person in relation to the Acquisition, the
content of this Announcement or any other matters referred to in
this Announcement.
Certain statements contained in this Announcement are
forward-looking statements and are based on current expectations,
estimates and projections about the expected effects of the
Acquisition on the Zegona Group, Vodafone Spain and the Enlarged
Group, the anticipated timing and benefits of the Acquisition, the
Zegona Group's and Vodafone Spain's anticipated standalone or
combined financial results and outlook, the industry and markets in
which the Zegona Group, Vodafone Spain and, the Enlarged Group
operate and the beliefs, and assumptions made by the Directors.
Words such as "expects", "should", "intends", "plans", "believes",
"estimates", "projects", "may", "targets", "would", "could" and
variations of such words and similar expressions are intended to
identify such forward-looking statements and expectations. These
statements are based on the current expectations of the management
of the Company, Vodafone Spain or Vodafone Group (as the case may
be) and are subject to uncertainty and changes in circumstances and
involve risks and uncertainties that could cause actual results to
differ materially from those expressed or implied in such
forward-looking statements. As such, forward-looking statements
should be construed in light of such factors. Neither the Company,
Vodafone Spain, nor any of their respective associates or
directors, proposed directors, officers or advisers, provides any
representation, assurance or guarantee that the occurrence of the
events expressed or implied in any forward-looking statements in
this Announcement will actually occur or that if any of the events
occur, that the effect on the operations or financial condition of
the Company, Vodafone Spain or the Enlarged Group will be as
expressed or implied in such forward-looking statements.
Forward-looking statements contained in this Announcement based on
past trends or activities should not be taken as a representation
that such trends or activities will necessarily continue in the
future. In addition, these statements are based on a number of
assumptions that are subject to change. The forward-looking
statements contained in this Announcement speak only as of the date
of this Announcement. The Company, its directors, the Banks, their
respective affiliates and any person acting on its or their behalf
each expressly disclaim any obligation or undertaking to update or
revise publicly any forward-looking statements, whether as a result
of new information, future events or otherwise, unless required to
do so by applicable law or regulation, the FCA or the London Stock
Exchange.
This Announcement refers to "EBITDAaL" and "Cash Flow" as
calculated by Zegona, the calculation of which will differ from the
methodology of calculating EBITDAaL and Cash Flow used by other
firms of companies in the Zegona Group's and Vodafone Spain's
industry.
No statement in this Announcement is intended to be a profit
forecast or profit estimate for any period, and no statement in
this Announcement should be interpreted to mean that earnings,
earnings per share or income, cash flow from operations or free
cash flow for the Company or Vodafone Spain for the current or
future financial years would necessarily match or exceed the
historical published earnings, earnings per share or income, cash
flow from operations or free cash flow for the Company or Vodafone
Spain.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this Announcement.
This Announcement has been issued by and is the sole
responsibility of the Company. No representation or warranty,
express or implied, is or will be made as to, or in relation to,
and no responsibility or liability is or will be accepted by any of
the Banks or by any of their respective affiliates or any person
acting on its or their behalf as to, or in relation to, the
accuracy or completeness of this Announcement or any other written
or oral information made available to or publicly available to any
interested party or its advisers, and any liability therefore is
expressly disclaimed.
The contents of this Announcement are not to be construed as
legal, business, financial or tax advice. Each investor or
prospective investor should consult their or its own legal adviser,
business adviser, financial adviser or tax adviser for legal,
financial, business or tax advice.
Completion of the Acquisition is subject to the satisfaction (or
waiver, where applicable) of a number of conditions as referenced
elsewhere in the Announcement, Consequently, there can be no
certainty that Completion will be forthcoming.
This Announcement has been prepared for the purposes of
complying with applicable law and regulation in the United Kingdom
and the information disclosed may not be the same as that which
would have been disclosed if this Announcement had been prepared in
accordance with the laws and regulations of any jurisdiction
outside the United Kingdom.
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END
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