TIDMVOD
RNS Number : 8294F
Vodafone Group Plc
09 November 2022
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR IMMEDIATE
RELEASE
VODAFONE ENTERS INTO A CO-CONTROL PARTNERSHIP WITH GIP AND
KKR
FOR VANTAGE TOWERS
9 November 2022
-- Strategic co-control partnership with long-term investors
with significant expertise in digital infrastructure to accelerate
Vantage Towers' growth and value creation
-- Creation of a JV with GIP and KKR, to hold Vodafone's 81.7%
stake in Vantage Towers which will be deconsolidated by
Vodafone
-- Attractive valuation of EUR32.0 per share, a premium of 19%
to Vantage Towers' 3 month volume-weighted average share price and
a multiple of 26x adjusted EBITDAaL for the 12 month period ended
31 March 2022
-- JV to make a voluntary takeover offer for the outstanding
Vantage Towers shares held by minority shareholders, funded through
new debt in the JV and equity from GIP and KKR
-- Minimum net cash proceeds to Vodafone of EUR3.2 billion,
based on equity from GIP and KKR that is fully committed at signing
and maximum minority take up in the voluntary takeover offer, which
would reduce Vodafone's leverage by 0.2x
-- Maximum net cash proceeds of EUR5.8-7.1 billion(1) ,
depending on the take up in the voluntary takeover offer and
subject to GIP and KKR raising further equity before closing to
increase their stake in the JV to 50%, reducing leverage by
0.4x-0.5x
-- Transaction conditional on regulatory clearances and expected
to close in the first half of 2023
Nick Read, Vodafone Group Chief Executive said: "This is a
landmark moment for both Vodafone and Vantage Towers. This
transaction successfully delivers on Vodafone's stated aims of
retaining co-control over a strategically important asset,
deconsolidating Vantage Towers from our balance sheet to ensure we
can optimise its capital structure and generate substantial upfront
cash proceeds for the Group to support our priority of
deleveraging. We are excited to partner with GIP and KKR, both
world-class investors who bring significant expertise in digital
infrastructure and share our long-term vision for Vantage Towers as
we collectively take the business to the next stage of its
growth."
Will Brilliant, Partner and Head of Digital Infrastructure at
GIP said: "We're delighted to join forces with Vodafone and KKR to
invest in Vantage Towers, a high-quality European tower portfolio
with strong upside potential. We are looking forward to capturing
the exciting value-creating opportunities in the European telecoms
infrastructure sector by advancing Vantage Towers' strategy and
supporting its capacity to build new sites. As strategic partners
with Vodafone and KKR, we will bring our deep infrastructure
expertise and resources to help the company deliver the best data
connectivity for individuals and businesses and contribute to
enabling Europe's digital future in the interest of all
stakeholders."
Vincent Policard, Partner and Co-Head of European Infrastructure
at KKR said: "Together with our strategic partners Vodafone and
GIP, we believe Vantage Towers' high-quality footprint and network
across the region ideally position it to meet the ever-growing
demand for mobile connectivity in Europe. We have a shared goal of
creating a pan-European telecoms champion by continuing to grow and
develop the business, leveraging the Consortium's significant
telecoms infrastructure investment experience and global resources.
At KKR we are long-term conviction investors in Europe's digital
infrastructure and at Vantage Towers we intend to pursue
value-creating investments to capitalise on the growth in this
sector and to help drive consolidation in a fragmented market."
Transaction overview
Vodafone Group Plc ("Vodafone") announces today that it has
entered into a strategic co-control partnership with a consortium
of long-term infrastructure investors led by Global Infrastructure
Partners ("GIP") and KKR (together the "Consortium") for Vodafone's
81.7% stake in Vantage Towers AG ("Vantage Towers").
Vodafone and the Consortium have created a joint venture (the
"JV") which will hold Vodafone's 81.7% stake in Vantage Towers.
Vodafone will contribute its shares in Vantage Towers into the JV
by way of a capital increase against new JV shares. The Consortium
will obtain a shareholding in the JV of up to 50% by acquiring JV
shares from Vodafone for cash.
In parallel with this announcement, the JV has announced today
that it will make a voluntary takeover offer ("VTO") for the
outstanding Vantage Towers shares held by minority shareholders
pursuant to Section 10 of the German Securities Acquisition and
Takeover Act. Completion of the VTO will be conditional on
customary conditions, including obtaining regulatory clearances for
the partnership between Vodafone and the Consortium. The full terms
and conditions of the VTO will be set out in a separate offer
document to be approved by the German Federal Financial Supervisory
Authority (BaFin). Following approval by BaFin, the offer document
will be published and the acceptance period for the VTO will
commence. The offer document (once available) and other information
pertaining to the VTO will be made available on the following
website: https://angebot.wpueg.de/oak/
The JV has received support from RRJ Capital in the form of an
irrevocable undertaking to accept the VTO. RRJ Capital is Vantage
Towers' second largest minority shareholder and owns 2.4% of its
ordinary share capital in issue (or 13% of the total
minorities).
Strategic co-control partnership
Vodafone and the Consortium share a joint ambition to accelerate
growth and create further value at Vantage Towers. GIP and KKR both
have extensive experience investing in and operating digital
infrastructure companies. As long-term partners with an industrial
mindset, Vodafone and the Consortium intend to enhance the
business' growth profile and profitability by supporting it in:
-- Delivering an ambitious build-to-suit programme which enables
mobile network operators to meet their coverage obligations and
densification requirements;
-- Capturing additional co-location opportunities from new and existing third-party customers;
-- Pursuing meaningful growth opportunities in adjacent areas
such as small cells and distributed antenna systems for 5G capacity
expansion, as well as edge computing;
-- Pursuing other growth-accretive investments, including
actively participating in the consolidation of the European tower
landscape; and
-- Enhancing profitability through continuous operational improvements.
As a result of the transaction, Vodafone will deconsolidate
Vantage Towers and equity account for its interest in the JV which
will allow Vantage Towers to optimise its capital structure and
help drive its pursuit of the above growth opportunities.
Summary valuation and financing
The transaction delivers an attractive valuation of EUR32.0 per
Vantage Towers share to Vodafone as well as to minority
shareholders through the VTO. This represents a 19% premium to the
Vantage Towers 3 month volume-weighted average share price ("VWAP")
as of 8 November 2022 and 33% to the March 2021 initial public
offering ("IPO") price of EUR24.0 per share. The transaction values
Vantage Towers at an equity value of EUR16.2 billion, implying an
EV / adjusted EBITDAaL multiple of 26x for the 12 month period
ended 31 March 2022(2) . This represents a significant premium to
trading multiples of publicly listed European tower companies and
is in line with precedent transactions.
The Consortium has fully committed equity in place to obtain a
shareholding in the JV of between 32% and 40%, depending on the
level of take-up in the VTO by minority shareholders. The
Consortium intends to raise additional equity before completion to
reach a shareholding of 50%. The JV will fund the acquisition of
Vantage Towers shares from minority shareholders in the VTO through
EUR1.6 billion of incremental debt, which will be non-recourse to
Vodafone, and equity from GIP and KKR. The table below summarises
the range of potential outcomes depending on the level of take-up
by minority investors in the VTO and additional Consortium
investment.
(EURbn)
Minority take up 0%(1) 100%
Acquisition of minorities 0.0 (3.0)
Additional JV debt (net of existing
debt) 1.6 1.6
Committed cash from Consortium 4.7 4.7
Other(4) (0.3) (0.2)
Minimum net cash proceeds to
Vodafone 6.0 3.2
Implied Consortium JV shareholding
(%) 40% 32%
Net additional cash from Consortium(4) 1.1 2.6
Maximum net cash proceeds to
Vodafone 7.1 5.8
Implied Consortium JV shareholding
(%) 50% 50%
Subject to the take-up in the VTO by minority shareholders and
the resulting leverage of the JV, Vodafone may sell a proportion of
its current Vantage Towers shareholding to the JV for cash and the
Consortium may contribute cash to the JV in exchange for new JV
shares. The minimum net cash proceeds to Vodafone will be EUR3.2
billion based on 100% take up in the VTO. The maximum total net
cash proceeds to Vodafone based on a 50% shareholding for the
Consortium will be between EUR5.8 billion and EUR7.1 billion(1) ,
depending on the take up in the VTO.
Should the Consortium own less than a 50% shareholding on 30
June 2023, Vodafone will have the right to sell JV shares to third
party investors to reduce its own stake to 50%, outside of lock-up
provisions and other restrictions.
DPLTA and squeeze-out intentions
The JV intends to implement a domination profit and loss
transfer agreement ("DPLTA") if the aggregate JV holding in Vantage
Towers following the VTO is below 95%, or a squeeze out of minority
shareholders if the aggregate JV holding in Vantage Towers is 95%
or higher following the VTO.
Post-closing, Vodafone and the Consortium will consider removing
Vantage Towers' public listing from the Frankfurt Stock
Exchange.
Dividend policy
Post-closing, the JV intends to pay annual dividends from excess
free cashflow to the shareholders, subject to market and operating
conditions.
Governance
Vodafone and the Consortium will have balanced governance rights
in the JV, with equal voting rights. The current leadership team
will continue to lead Vantage Towers to deliver the next phase of
growth.
It is the intention of both Vodafone and the Consortium to build
Vantage Towers' success for the long term. As is customary for such
partnerships, certain provisions have been agreed to give the
shareholders strategic and financial flexibility. In particular,
Vodafone and the Consortium have agreed to a lock-up period of 3
years post-closing of the transaction, after which each shareholder
will be able to initiate a full or partial sale of its shareholding
in the JV, subject to a right of first offer in favour of the other
shareholder.
Impact on Vodafone
Vodafone will deconsolidate Vantage Towers and equity account
for its interest in the JV from closing of the transaction. It is
expected that the transaction will have a slightly dilutive effect
on Vodafone's adjusted earnings per share and free cash flow.
Sale proceeds are intended to be used for deleveraging and will
reduce net debt/EBITDAaL by 0.2-0.5x(3) , in line with Vodafone's
medium-term ambition to reduce leverage to the bottom end of its
2.5-3.0x range.
As at 31 March 2022, Vantage Towers had gross assets of EUR10.5
billion. For the 12 months ended 31 March 2022, Vantage Towers
generated profit before tax of EUR251 million.
Additional information
The transaction is subject to customary antitrust and FDI
approvals and is expected to close in the first half of 2023.
Following Vodafone's H1 FY23 results on 15 November, there will
be a webcast Q&A session at 10am UKT for equity research
analysts.
Transaction advisers
In connection with the transaction, Robey Warshaw and UBS are
acting as financial advisers to Vodafone, and Linklaters is acting
as legal adviser to Vodafone.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014 as it
forms part of domestic UK law as defined in the Market Abuse
(Amendment) (EU Exit) Regulations (SI 2019/310).
For more information, please contact:
Investor Relations Media Relations
Investors.vodafone.com Vodafone.com/media/contact
ir@vodafone.co.uk GroupMedia@vodafone.com
Registered Office: Vodafone House, The Connection, Newbury,
Berkshire RG14 2FN, England. Registered in England No. 1833679
Person responsible
The person responsible for arranging the release of this
announcement on behalf of Vodafone is Rosemary Martin, Group
General Counsel and Company Secretary (Tel: +44 (0)1635 33251)
About Vodafone
Unique in its scale as the largest pan-European and African
technology communications company, Vodafone transforms the way we
live and work through its innovation, technology, connectivity,
platforms, products and services.
Vodafone operates mobile and fixed networks in 22 countries, and
partners with mobile networks in 47 more. As of 30 June 2022, we
had over 300 million mobile customers, more than 28 million fixed
broadband customers and 22 million TV customers. Vodafone is a
world leader in the Internet of Things ("IoT"), connecting around
160 million devices and platforms.
We have revolutionised fintech in Africa through M-Pesa, which
celebrates its 15th anniversary in 2022. It is the region's largest
fintech platform, providing access to financial services for more
than 50 million people in a secure, affordable and convenient
way.
Our purpose is to connect for a better future by using
technology to improve lives, digitalise critical sectors and enable
inclusive and sustainable digital societies.
We are committed to reducing our environmental impact to reach
net zero emissions across our full value chain by 2040, while
helping our customers reduce their own carbon emissions by 350
million tonnes by 2030. We are driving action to reduce device
waste and achieve our target to reuse, resell or recycle 100% of
our network waste.
We believe in the power of connectivity and digital services to
improve society and economies, partnering with governments to
digitalise healthcare, education and agriculture and create
cleaner, safer cities. Our products and services support the
digitalisation of businesses, particularly small and medium
enterprises (SMEs).
Our inclusion for all strategy seeks to ensure no-one is left
behind through access to connectivity, digital skills and creating
relevant products and services such as access to education,
healthcare and finance. We are also committed to developing a
diverse and inclusive workforce that reflects the customers and
societies we serve.
For more information, please visit http://www.vodafone.com ,
follow us on Twitter at @VodafoneGroup or connect with us on
LinkedIn at http://www.linkedin.com/company/vodafone .
About Vantage Towers
Vantage Towers AG is a leading tower company in Europe with
around 83,000 sites in ten countries, connecting people, businesses
and devices in cities and rural areas.
The company was founded in 2020 and is headquartered in
Düsseldorf, Germany. Vantage Towers has been listed on the Deutsche
Börse's Prime Standard Index in Frankfurt since 18 March 2021. On
20 September the company was admitted to the MDAX and TecDAX.
Vantage Towers' portfolio includes towers, masts, rooftop sites,
distributed antenna systems (DAS) and small cells. By building,
operating and leasing this passive infrastructure to MNOs, IoT
providers or public utility companies Vantage Towers is making a
significant contribution to better connectivity and the sustainable
digital transformation of Europe.
For more information, please visit our website at
http://www.vantagetowers.com, follow us on Twitter at
@VantageTowers or connect with us on LinkedIn at
http://www.linkedin.com/company/vantagetowers
About GIP
GIP is a leading independent infrastructure fund manager that
makes equity and debt investments in infrastructure assets and
businesses. GIP targets investments in the energy, transport,
digital infrastructure, and water/waste sectors in both OECD and
select emerging market countries. Headquartered in New York, GIP
operates out of 10 offices: New York, London, Stamford
(Connecticut), Sydney, Melbourne, Brisbane, Mumbai, Delhi,
Singapore and Hong Kong. GIP manages c. US $84 billion for its
investors. GIP's portfolio companies have combined annual revenues
of c. US $68 billion and employ over 100,000 people. For more
information, visit www.global-infra.com.
About KKR
KKR is a leading global investment firm that offers alternative
asset management as well as capital markets and insurance
solutions. KKR aims to generate attractive investment returns by
following a patient and disciplined investment approach, employing
world-class people and supporting growth in its portfolio companies
and communities. KKR sponsors investment funds that invest in
private equity, credit and real assets and has strategic partners
that manage hedge funds. KKR's insurance subsidiaries offer
retirement, life and reinsurance products under the management of
Global Atlantic Financial Group. References to KKR's investments
may include the activities of its sponsored funds and insurance
subsidiaries.
KKR established its Global Infrastructure business in 2008 and
has since grown to one of the largest infrastructure investors
globally with a team of more than 75 dedicated investment
professionals. The firm currently oversees approximately US$50
billion in infrastructure assets globally as of 30 September, 2022,
and has made over 65 infrastructure investments across a range of
sub-sectors and geographies. KKR's infrastructure platform is
devised specifically for long term, capital intensive structural
investments.
For additional information about KKR & Co. Inc. (NYSE: KKR),
please visit KKR's website at www.kkr.com and on Twitter
@KKR_Co.
Forward-looking statements
The information in this announcement (the "Information") may
constitute or include forward-looking statements. Forward-looking
statements include, without limitation, statements that typically
contain words such as "anticipate", "target", "expect", "estimate",
"intend", "plan", "believe", "hope", "aims", "continue", "will",
"may", "should", "would", "could", or other words of similar
meaning. By their nature, forward-looking statements involve risks
and uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. Vodafone
cautions you that forward-looking statements are not guarantees of
the occurrence of such future events or of future performance and
that in particular the actual results of operations, financial
condition and liquidity, the development of the industry in which
Vodafone, the Vodafone Group, Vantage Towers and other persons
involved in the transaction operate and the outcome or impact of
the transaction and related matters on Vodafone, the Vodafone Group
and/or Vantage Towers or other persons may differ materially from
those made in or suggested by the forward-looking statements
contained in the Information. These expectations or
any forward-looking statements could prove to be incorrect, and
outcomes usually cannot be influenced by Vodafone, the Vodafone
Group and/or Vantage Towers. It should be kept in mind that actual
events or consequences may differ materially from expectations.
Vodafone expressly disclaims any obligation or undertaking to
release any updates or revisions to any forward-looking statements
to reflect any change in Vodafone's expectations with regard
thereto or any changes in events, conditions or circumstances on
which any forward-looking statements are based. No representation
or warranty is made that any of these forward-looking statements
will come to pass or that any particular result will be achieved.
Undue influence should not be given to, and no reliance should be
placed on, any forward-looking statement. No statement in the
Information is intended to be nor may be construed as a profit
forecast or valuation.
Notes to announcement
1) Transaction effects exclude impact from the irrevocable undertaking received from RRJ Capital
2) Based on adjusted consolidated EBITDAaL of EUR543 million for
the 12 month period ended 31 March 2022 and a total enterprise
value of EUR13.9 billion. Enterprise value is based on: 505.8
million shares multiplied by the offer price of EUR32 per share,
plus Vantage Towers' net debt (EUR1.9 billion, as of 31 March
2022), less adjustments (EUR4.2 billion) for Vantage Towers'
shareholdings in INWIT (33.2%) and CTIL (50.0%), divided by Vantage
Towers' consolidated EBITDAaL (which excludes Inwit and CTIL)
3) Leverage impact will depend on the level of equity investment
by the Consortium and minority take-up in the VTO
4) Includes adjustment for cash tax and fees payable as a result of the transaction
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END
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