Vodafone Group Plc's share in its towers subsidiary will be sold to KKR & Co. and Global Infrastructure Partners (GIP) in a transaction estimated to be worth €16.3 billion ($16.2 billion).
On Wednesday, Nov. 9, the British telecom company verified a Bloomberg News story by issuing a statement confirming the €32-per-share (about $32.15) offer for Vantage Towers AG, which is traded on the Frankfurt stock exchange. When compared to Vantage's closing price on Monday, the price reflects a premium of 12%.
Both UBS Group AG and Robey Warshaw LLP provided advice to Vodafone about the transaction.
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Terms of the Deal
Under the terms of the agreement, Vodafone would merge its 81.7% stake in Vantage into a joint venture (JV) with KKR and GIP. According to statistics collated by Bloomberg, the JV will then launch a buyout bid for outstanding shares in Vantage, which might be the largest taking private of a German firm to date. This offer has the backing of RRJ Capital, Vantage's second-largest minority investor.
At some point in the future, the KKR and GIP consortium will hold up to 50% of the JV.
As of Wednesday, Vantage stock had gained as much as 11%. At 11:40 AM, the stock price had risen 9.9% in Frankfurt, where it reached a value of €16.3 billion. In London, Vodafone shares dropped 1.9%.
Sources familiar with the case have said that the Saudi Arabian Public Investment Fund (PIF) is contributing to the deal's funding.
"This transaction successfully delivers on Vodafone's stated aims of retaining co-control over a strategically important asset, deconsolidating Vantage Towers from our balance sheet to ensure we can optimise its capital structure and generate substantial upfront cash proceeds," said Vodafone CEO Nick Read, via Bloomberg.
The Strategic Bidders
For Vantage, KKR and GIP were up against a number of other financial and strategic bidders, such as a partnership led by the Spanish telecoms firm Cellnex Telecom SA and the Singaporean government investment firm GIC Pte.
Despite a near-30% decline in global mergers and acquisitions this year, dealmakers are using network towers to stay productive.
Investment firms looking for stable returns in uncertain markets are eager purchasers of the assets being sold by telecom companies to earn capital for fiber-optic rollouts and cellular improvements.
This week, Bloomberg News reported that PIF is among the bidders considering a final offer for network towers being auctioned by Qatari telecom operator Ooredoo QPSC, which may be worth as much as $5 billion. French tower owner TDF has been the subject of takeover speculation in Europe, with EQT AB private equity company viewed as the favorite to purchase a share.
Earlier this year, Brookfield Asset Management Inc. and DigitalBridge Group Inc. outbid KKR and GIP for a stake in Deutsche Telekom AG's tower business.
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Written by Trisha Kae Andrada
