Vodafone Greece to acquire Hellas Online

Vodafone Greece has agreed to acquire 72.7 percent of the share capital of Hellas Online (HOL) from the Intracom Group and World Equities Investments Holdings (WEI) for a total cash consideration of €72.7 million.

Completion of the transaction is subject to a number of conditions, including antitrust clearance by the relevant competent authorities. The Transaction values the fully diluted equity of HOL at €100 million and is equivalent to an enterprise value of €311 million including HOL’s adjusted net debt of €211 million.

HOL is a leading provider of broadband and fixed-line telephony in Greece with around 519,000 customers as at 31 December 2013, representing a market share of approximately 11 percent.

The Transaction builds on the successful track record of commercial cooperation between Vodafone Greece and HOL since 2009, when Vodafone Greece became an 18.5 percent shareholder, and accelerates Vodafone’s unified communications strategy in Greece. The Transaction creates a leading integrated telecom operator in Greece with the number two market position by revenues in both fixed-line and mobile communications.

The combined company will have the scale, management expertise, products and services and funding needed to compete more effectively in the Greek telecommunications market.

Vodafone expects to achieve cost and capex synergies with an annual run-rate of €24 million before integration costs by the third full year post completion, equivalent to a net present value of approximately €135 million after integration costs. These synergies are expected to be realised from sharing network and IT infrastructure, savings on marketing and bill collections, and rationalisation of overlapping functions.

The Transaction values HOL at a multiple of 4.5x 2013A EBITDA and 9.8x 2013A OpFCF, which is equivalent to a multiple of 5.6x 2013A OpFCF adjusted for cost and capex synergies.

Vodafone views the management and employees of HOL as important to the future success of the enlarged company. HOL’s employee base would also benefit from greater and wider career opportunities available in a global business such as Vodafone. Vodafone will finance the transaction from its existing cash resources and committed but undrawn bank facilities.

For the twelve months ended 31 December 2013, HOL reported total revenue of €227.4 million, EBITDA of €68.4 million and capex of €36.7 million. As at 31 December 2013, HOL reported gross assets of €281.1 million.

Vodafone Greece currently owns an 18.4 percent stake in Hellas Online. The Transaction is expected to complete in calendar Q4 2014, following which Vodafone Greece would own 91.2 percent of HOL and be under an obligation to extend a mandatory takeover offer for the remaining shares in HOL. Bank of America Merrill Lynch is acting as financial adviser to Vodafone in connection with the transaction.

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