TIDMVOD
RNS Number : 9159R
Vodafone Group Plc
10 November 2021
10 November 2021
VODAFONE AGREES TO TRANSFER ITS 55% INTEREST IN VODAFONE EGYPT
TO VODACOM IN EXCHANGE FOR CASH AND NEW ORDINARY SHARES IN
VODACOM
Vodafone Group Plc(1) ("Vodafone") announces today that it has
agreed to transfer its 55% shareholding in Vodafone Egypt to
Vodacom Group Limited ("Vodacom"), its sub-Saharan African
subsidiary. This transfer simplifies the management of Vodafone's
African holdings and further strengthens the delivery of
connectivity and financial services in Africa.
Transaction rationale
The transaction is expected to generate clear benefits for
Vodafone, Vodacom and Vodafone Egypt:
-- Vodafone simplifies the management of its African holdings;
-- Vodacom gains exposure to another leading business in an
attractive market, diversifying its portfolio and accelerating its
growth profile; and
-- Vodafone Egypt will benefit from closer co-operation with
Vodacom, enabling it to accelerate growth in financial services and
IoT.
Transaction details
The transaction values Vodafone's 55% shareholding in Vodafone
Egypt at EUR2,722 million on a debt free, cash free basis, implying
a multiple for the last twelve month period ended 30 September 2021
of 7.3x Adjusted EBITDAaL and 12.2x Adjusted OpFCF(2) . Based on
Vodafone's 55% share of the net debt in Vodafone Egypt as at 30
September 2021 the total equity consideration is EUR2,365 million
(the "Purchase Consideration"). Approximately 80% of the Purchase
Consideration (EUR1,892 million) will be settled by the issue of
242 million new ordinary Vodacom shares to Vodafone at an issue
price of ZAR 135.75 per share. As a result, Vodafone's ownership in
Vodacom will increase from 60.5% to 65.1%.
The remaining 20% of the Purchase Consideration (EUR473 million)
will be settled in cash(3) .
Under the terms of the sale and purchase agreement, the cash
element of the Purchase Consideration will be adjusted for any
movement in the net debt and agreed working capital of Vodafone
Egypt between signing and closing. As such, Vodafone will be
entitled to its 55% share of the cash generated by Vodafone Egypt
between signing and closing.
The Johannesburg Stock Exchange ("JSE") has taken note that
Vodacom's JSE defined free float will be below 20% as a result of
Vodafone's increased ownership. Given the scale of Vodacom's
current liquidity on the JSE, the JSE has not asked for any
remedial steps to be taken. Vodafone confirms that is has no
current intention to dispose of any of its shares in the market to
increase Vodacom's free float.
Conditions to completion and indicative timetable
A committee of Vodacom's independent non-executive directors has
unanimously approved the transaction. Vodacom has appointed an
independent expert, PricewaterhouseCoopers Inc., to provide a
fairness opinion on the proposed transaction which will be included
in the circular. The circular and notice of a general meeting will
be posted to Vodacom Group shareholders in due course. Given the
transaction represents a related party transaction per the listing
requirements of the JSE, Vodafone will not vote on the transaction
and the transaction will require approval by ordinary resolution
from the minority shareholders representing 39.5% of the Vodacom
shares.
Vodacom has received an irrevocable undertaking to vote in
favour of the transaction from YeboYethu Investment Company (RF)
Proprietary Limited which owns 6.2% of the Vodacom shares in issue
and 15.8% of the Vodacom shares in issue outside those held by
Vodafone. Vodacom has also received an in-principle letter of
support to vote in favour of the proposed transaction from Public
Investment Corporation which owns 14.3% of the Vodacom shares in
issue and 36.1% of the Vodacom shares in issue outside those held
by Vodafone as at the date of their letter. The Public Investment
Corporation's in-principle support is subject to it conducting an
assessment and evaluation process upon receipt of the circular.
The sale of Vodafone's shareholding in Vodafone Egypt
constitutes a Class 2 transaction for the purposes of the UK
Financial Conduct Authority's Listing Rules, and, as such does not
require Vodafone shareholders' approval.
Completion of the transaction is subject to a number of
additional conditions, including but not limited to: approval from
the Financial Surveillance Department of the South African Reserve
Bank and approval from the National Telecom Regulatory Authority of
Egypt. Vodacom has committed to Vodafone that they will sign a deed
of adherence to the shareholders' agreement with Telecom Egypt. The
transaction is expected to close before 31 March 2022.
Additional financial information
Contribution of Vodafone Egypt to Vodafone financial
statements
12-month period to September 2021 ( EUR million) (4) :
Adjustment to
Vodafone Group reflect intercompany
reported charges(5) Adjusted financials
=================== =============== ====================== ====================
Revenue 1,638 - 1,638
Adjusted EBITDAaL 729 (49) 680
Capex (275) - (275)
Adjusted OpFCF(2) 454 (49) 405
12-month period to March 2021 (EUR million)(6) :
Adjustment to
Vodafone Group reflect intercompany
reported charges(5) Adjusted financials
=================== =============== ====================== ====================
Revenue 1,537 - 1,537
Adjusted EBITDAaL 652 (48) 604
Capex (258) - (258)
Adjusted OpFCF(2) 394 (48) 346
For the financial year ended 31 March 2021 Vodafone Egypt
reported EUR346 million of profit before tax, and at 31 March 2021
the value of Vodafone Egypt's Gross Assets was EUR2,405
million.
About Vodafone
Vodafone is a leading telecommunications company in Europe and
Africa. Our purpose is to "connect for a better future" enabling an
inclusive and sustainable digital society. Our expertise and scale
gives us a unique opportunity to drive positive change for society.
Our networks keep family, friends, businesses and governments
connected and - as COVID-19 has clearly demonstrated - we play a
vital role in keeping economies running and the functioning of
critical sectors like education and healthcare.
Vodafone is the largest mobile and fixed network operator in
Europe and a leading global IoT connectivity provider. Our M-Pesa
technology platform in Africa enables 50m people to benefit from
access to mobile payments and financial services. We operate mobile
and fixed networks in 21 countries and partner with mobile networks
in 49 more. As of 30 June 2021, we had over 300m mobile customers,
more than 28m fixed broadband customers, over 22m TV customers and
we connected 130m IoT devices.
We support diversity and inclusion through our maternity and
parental leave policies, empowering women through connectivity and
improving access to education and digital skills for women, girls,
and society at large. We are respectful of all individuals,
irrespective of race, ethnicity, disability, age, sexual
orientation, gender identity, belief, culture or religion.
Vodafone is also taking significant steps to reduce our impact
on our planet by reducing our greenhouse gas emissions by 50% by
2025 and becoming net zero by 2040, purchasing 100% of our
electricity from renewable sources in Europe and across our entire
operations by 2025, and reusing, reselling or recycling 100% of our
redundant network equipment.
For more information, please visit www.vodafone.com , follow us
on Twitter at @VodafoneGroup or connect with us on LinkedIn at
www.linkedin.com/company/vodafone .
About Vodacom
Vodacom is a leading and purpose-led African connectivity,
digital and financial services company. From our roots in South
Africa, we have grown our business to include operations in
Tanzania, the Democratic Republic of the Congo (the DRC),
Mozambique, Lesotho and Kenya. Our mobile networks cover a
population of over 295.8 million people. Through Vodacom Business
Africa (VBA), we offer business-managed services to enterprises in
48 countries. Vodacom is majority owned by Vodafone (60.5%
holding), one of the world's largest communications companies by
revenue.
Notes
1. The selling entities are Vodafone Europe B.V. and Vodafone
International Holdings B.V., which are 100% owned indirect
subsidiaries of Vodafone Group Plc.
2. Adjusted OpFCF defined as Adjusted EBITDAaL less Capex.
3. The cash proceeds from the transaction will be retained by
Vodafone for general corporate purposes.
4. Converted from EGP to EUR at an average rate of 18.8 based on
actual reported fx for the 12-month period to 30 September
2021.
5. Adjustment to reflect intercompany charges below EBITDAaL.
Existing intercompany arrangements will remain in place after
closing.
6. Converted from EGP to EUR at an average rate of 18.4 based on
actual reported fx for the 12-month period to 31 March 2021.
Goldman Sachs acted as financial advisor to Vodafone.
- ends -
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
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