The resulting entity would take the form of a joint venture controlled by ORANGE and MASMOVIL (LORCA JVCO) on a 50/50 basis, with a valuation of the combined entity of €19.6 billion. Bothentities are attractively valued, with a valuation for Orange Spain of €8.1 billion and a valuation of MASMOVIL (which includes the acquisition of EUSKALTEL) of €11.5 billion.
ORANGE and LORCA JVCO would have equal voting rights in the resulting combined entity. Consequently, neither ORANGE nor LORCA JVCO would consolidate the combined entity in their accounts.
The agreement between the parties contemplates the right to launch an Initial Public Offering (IPO) under certain conditions agreed upon by both parties and the right of ORANGE to take control and consolidate the resulting combined entity in its accounts in the event of an IPO. In no event would ORANGE be obliged neither to exit the resulting combined entity nor to exercise these options.
The Joint Venture would integrate the assets and teams of the two companies in Spain, relying on their highly complementary business models, to provide service to 4.0+3.13 million fixed-line customers, 11.5+8.7 mobile clients and 1.5 million TV clients. The Joint Venture would own significant network assets, which would give it a competitive differentiation in the market.
The resulting entity would become a stronger competitor, with revenues of around 7.5 billion and EBITDAaL of €2.2 billion, addressing an ambitious and sustainable expansion of its FTTH and 5G networks and contributing to Spain maintaining and continuing to develop highly competitive telecommunications infrastructures.
This Joint Venture would generate relevant synergies that could reach €450 million from the third year after the closing of the transaction.
The transaction is expected to be signed during the second quarter of 2022 and should be completed in the second quarter of 2023, after obtaining the necessary approvals from the administrative, competition and regulatory authorities.
Lazard acted as financial advisor to ORANGE. Goldman Sachs Bank Europe SE acted as financial advisor to MASMOVIL and BNP Paribas acted as financing advisor to ORANGE.
Freshfields Bruckhaus Deringer acted as Legal advisor to MASMOVIL, while Jones Day acted for ORANGE.
Freshfields advised MASMOVIL with a Global Transactions Corporate team led by partner Armando Albarrán, with the support of associates Mario Pacini, Javier Sánchez-Valiente and Iñigo Ríos. Armando was the lead lawyer that advised MASMOVIL on its €2 billion friendly takeover bid for Euskaltel.
Jones Day advised ORANGE with a team led by partner and head of Latin America/Miami practice and managing partner of the firm´s São Paulo office Luis Riesgo. Luis Riesgo has served as the lead lawyer in a wide variety of high-profile strategic transactions, including: Orange’s $4.4 billion acquisition of Jazztel, $7.7 billion acquisition of Amena, and $1.4 billion sale of Orange Dominicana, its subsidiary in the Dominican Republic.