Vodafone bids for Spanish cable operator Ono-sources

LONDON/MADRID Mon Feb 10, 2014 7:36am EST

LONDON/MADRID Feb 10 (Reuters) - Britain's Vodafone has made an offer to buy Spain's largest cable operator Ono from its private-equity owners ahead of a board meeting of the Spanish company on Tuesday, two people familiar with the situation said.

Other sources familiar with the matter have told Reuters that Ono, which sells fixed and mobile phone, TV and internet services, believes it has an enterprise value of at least 7 billion euros ($9.5 billion).

Vodafone and Ono declined to comment on Monday. The private equity owners of the group could not immediately be reached for comment.

Ono's owners had been planning an initial public offering this year in a bid to capitalise on a wave of investor interest in the increasingly successful cable sector.

But the owners may now consider a straight sale as U.S. cable firm Liberty Global has also expressed an interest in recent weeks.

The two sources also said they believed this was Vodafone's second offer, after the first was rejected.

Vodafone has been acquiring broadband assets to allow it to offer bundled services to consumers and offload traffic from its mobile networks.

Investment funds Providence Equity Partners, Thomas H. Lee Partners, CCMP Capital Advisors, and Quadrangle Capital own 54 percent of Ono, according to the company's website.

Spokesmen for Providence and CCMP declined to comment on Monday. Thomas H. Lee and Quadrangle could not immediately be reached for comment.

ONO has 13 board members, but the funds that control 54 percent of the company only hold 5 seats so they would have to convince at least another two board members to back a deal.

Liberty Global, owned by billionaire John Malone, has been on a spending spree to increase the size of its empire in Europe, where it derives more than 90 percent of its revenue.

It bought Britain's Virgin Media for $15.8 billion last year, and has agreed to pay 10 billion euros ($13.7 billion) for Dutch cable operator Ziggo after months of negotiations.

Spain is one of the few European countries, along with France, where Liberty is not already present.

The cable sector trades on an enterprise value to 2013 core profit (EBITDA) multiple of 9.4 times, according to Reuters data.

Ono had core earnings of 752 million euros for 2012, which at the sector multiple of 9.4 times would give an enterprise value of 7.1 billion euros.

A source familiar with the situation earlier told Reuters that any buyer would have to pay 10 to 12 times operating profit if it hoped to preempt the IPO that was being prepared in parallel.

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