Zegona buys Vodafone España

VODAFONE is bidding farewell to its Spanish subsidiary after more than a quarter of a century.

The UK-based communications investment firm Zegona will pay €4.1 billion in cash assets for Vodafone España, together with up to €900 million in Zegona preference shares that will be redeemable within six years of finalising the deal.

Zegona announced on October 31 that it had entered into “committed debt financing of €4.2 billion and a committed revolving credit facility of €0.5 billion and an equity placing of up to €600 million.”

Eamonn O’Hare, Zegona’s Chairman and chief executive said the company was “very excited about the opportunity to return to the Spanish telecoms market.”

O’Hare went on to explain that the “financially attractive” acquisition of Vodafone was the company’s 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,” he said.

Financial daily Cinco Dias quoted industry insiders who said that Vodafone, which was formerly so successful, was eventually pushed aside following a series of bad decisions by the parent company and the Spanish subsidiary.

“They either failed to see how to change the company or did not know enough about the Spanish market, which is possibly the most competitive in Europe,” they said.

As is customary in a takeover by a foreign firm, the deal will need the approval of the Spanish government although Zegona sources said they did not foresee problems in this respect.

Meanwhile, Margherita Della Valle, Chief Executive of Vodafone, thanked the company’s Spanish team for their dedication and “relentless determination” to improve the company’s performance.

“However, the market has been challenging, with structurally low returns,” Della Valle admitted.