Wed, 14 Jun 2023 | MERGER
Vodafone and the owners of Three mobile network, CK Hutchison, have agreed on a merger to combine their UK businesses. The companies have been in talks about a merger since last year and have today announced the deal, which will see them become the biggest mobile player in the UK and one of Europe’s leading 5G networks, worth a reported £15 billion.
Canning Fok, Group Co-Managing Director of CK Hutchison said: "Three UK and Vodafone UK currently lack the necessary scale on their own to earn their cost of capital."
Fok added that the merged operations would have "the scale needed to deliver a best-in-class 5G network for the UK, transforming mobile services for our customers and opening up new opportunities for businesses across the length and breadth of the UK."
He continued that the deal would "unlock significant value for CK Hutchison and its shareholders, realise material synergies, reduce net financial indebtedness and further strengthen its financial profile."
The merger will give Vodafone a 51 per cent share of the combined business while CK Hutchison will have 49 per cent. Together they have said they will invest £11 billion in the UK over 10 years.
Vodafone UK, which has a market value of around £20 billion will contribute £4.3 billion, while Three UK will contribute £1.7 billion, subject to customary completion adjustments. The initial total debt in the company is expected to be approximately £6.0 billion, of which the £1.7 billion amount owed to CK Hutchison will be refinanced.
Announcing the deal, the companies added that “The Transaction is expected to result in substantial efficiencies. These are expected to amount to more than £700 million of annual cost and capex synergies by the fifth full year post-completion, with an implied NPV of over £7 billion.”
Vodafone recently appointed a new Group Chief Executive, Margherita Della Valle who will be tasked with overseeing the merger, replacing the outgoing Nick Read.
Read about UK telecoms M&A.
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