Telefonica to buy O2
Telefonica SA, the Spanish telecommunications company has agreed to buy mobile phone company O2 in a $31.4 billion deal that will help it expand in the United Kingdom and German markets.
The Spanish company said Monday it has agreed to pay 200 pence ($3.55) per share in cash for O2 shares, a 22 percent premium over their closing price on Friday. The O2 board recommended that shareholders accept the offer.
Telefonica Chairman Cesar Alierta said the deal will boost the company’s capacity for growth and balance its exposure regionally, giving it more assets in Europe after a recent expansion in Latin America.
“It accelerates Telefonica’s already beneficial growth prospects, widening the gap with our peers,” he said. “We are entering in the two largest markets in Europe with critical mass.”
The combined company will have 116 million mobile phone users and a 16 percent market share in terms of revenue in Europe’s top five mobile phone markets.
It will have 170 million customers globally including fixed-line users, compared to Vodafone Group PLC which has over 165 million mobile customers, France Telecom which has 70 million mobile customers, and Deutsche Telekom which had previously shown interest in O2 with over 80 million mobile customers.
Peter Erskine, chief executive of O2, said the geographic operating differences between the two companies was a strong reason for recommending the deal.
“It’s good for customers. They have no overlapping territory, so they will be able to offer our customers better roaming and better services around the world,
