Vodafone today announces that Vodafone Greece has agreed to acquire 72.7% of the share capital of Hellas Online SA (“HOL”) from the Intracom Group (“Intracom”) and World Equities Investments Holdings SA (“WEI”) for a total cash consideration of €72.7m (the “Transaction”). 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 €100m and is equivalent to an enterprise value of €311m including HOL’s adjusted net debt of €211m.
Principal benefits of the transaction
Acceleration of Vodafone’s unified communications strategy in Greece
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%. 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% 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.
Cost and capex savings
Vodafone expects to achieve cost and capex synergies with an annual run-rate of €24m before integration costs by the third full year post completion, equivalent to a net present value of approximately €135m 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.
HOL management and employees
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 €227.4m, EBITDA of €68.4m and capex of €36.7m. As at 31 December 2013, HOL reported gross assets of €281.1m.
Vodafone Greece currently owns an 18.4% stake in Hellas Online. The Transaction is expected to complete in calendar Q4 2014, following which Vodafone Greece would own 91.2% 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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Vodafone is one of the world’s largest telecommunications companies and provides a range of services including voice, messaging, data and fixed communications. Vodafone has mobile operations in 26 countries, partners with mobile networks in 52 more, and fixed broadband operations in 17 markets. As of 30 June 2014, Vodafone had 436m mobile customers and 9m fixed broadband customers. For more information, please visit: www.vodafone.com
About Hellas Online
Hellas Online (“HOL”) is one of the leading providers of fixed-line telephony services in Greece, providing a range of voice and internet access services. HOL owns and operates a large core backbone network throughout continental Greece and through its points of presence (PoPs) it offers significant population coverage of the two largest cities in Greece, Athens and Thessaloniki.
HOL has provided internet access services in Greece since 1993, having been one of first internet service providers (ISPs) in the country and has evolved from an ISP to a fixed-line telecommunications services provider offering a broad range of retail, business and wholesale services.
This document does not constitute, or form part, of any offer or invitation to sell, allot or issue or any solicitation of any offer to purchase or subscribe for any securities, nor shall it (or any part of it) form the basis of, or be relied on in connection with, or act as any inducement to enter into, any contract or commitment for securities.
Forward Looking Statements
Certain information contained in this document constitutes “forward-looking statements,” which can be identified by the use of terms such as “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, “continue”, “target” or “believe” (or the negatives thereof) or other variations thereon or comparable terminology. Such statements express the intentions, opinions, or current expectations of Vodafone with respect to possible future events and are based on current plans, estimates and forecasts which Vodafone has made to the best of its knowledge, but which do not claim to be correct in the future. Due to various risks and uncertainties, actual events or results or actual performance of Vodafone may differ materially from those reflected or contemplated in such forward-looking statements. No assurances can be given that the forward-looking statements in this announcement will be realised. As a result, recipients should not rely on such forward-looking statements. Subject to compliance with applicable law and regulations, Vodafone undertakes no obligation to update these forward-looking statements. No representation or warranty is made as to the reasonableness of such forward-looking statements. No statement in this document is intended to be nor may be construed as a profit forecast.
Bank of America Merrill Lynch
Merrill Lynch International (“Bank of America Merrill Lynch”), a subsidiary of Bank of America Corporation, is acting exclusively for Vodafone in connection with the Transaction and for no one else and will not be responsible to anyone other than Vodafone for providing the protections afforded to its clients or for providing advice in relation to the Transaction.
 Adjusted net debt of €211m based on reported net debt as at 31 December 2013 of €157.3m adjusted for €0.7m of derivative financial instruments, €43.1m of related party financing and €10.0m preference shares issued in December 2011