* IPO move comes as Vodafone makes takeover approach
* Ono could bring Vodafone bigger presence in rural areas
* Ono sees enterprise value at around 7 bln euros - source
By Robert Hetz and Kate Holton
MADRID/LONDON, Feb 12 Spain's largest cable
operator, Ono, said it was pressing ahead with its plan for a
stock market sale, putting pressure on Britain's Vodafone
to raise its takeover proposal.
Ono, which sells fixed and mobile phone, TV and internet
services, has been preparing a 7 billion euro ($9.6 billion)
listing to capitalise on strong investor interest in European
But Vodafone has approached its private equity owners with a
takeover offer, sources familiar with the matter told Reuters
this week, seeking to create the biggest rival to Spanish
telecoms market leader Telefonica.
Ono said on Wednesday its board did not discuss any
takeover proposal at a meeting on Tuesday.
Its shareholders will now attend their annual meeting on
March 13 to give formal approval for an initial public offering
(IPO), meaning Vodafone is likely to get a couple of weeks to
decide whether to increase its price.
"We believe that the acceleration of the IPO may tip the
scales in terms of forcing the hand of possible bidders in
making up their mind before the IPO, or risk having to pay
higher multiples in the future for a takeover," said JB Capital
Markets in a note to clients.
A potential competing bidder, U.S.-based Liberty Global
controlled by billionaire John Malone, has also
expressed an interest in Ono, a person familiar with the
situation has said.
Private equity funds Providence Equity Partners, Thomas H.
Lee Partners, CCMP Capital Advisors and Quadrangle Capital own
54 percent of Ono.
Analysts said the situation was reminiscent of the stock
market sales of European cable operators Kabel Deutschland and
Ziggo that were subsequently taken over by Vodafone and Liberty,
respectively, at higher prices.
Espirito Santo, in a note to clients, said it still saw
Vodafone as the most likely buyer as it could extract greater
cost and other benefits from a combination with Ono than Liberty
Vodafone has been hit hard in Spain in recent years, where
Telefonica has turned the market ultra competitive by folding
the four services of mobile, fixed-line, broadband and pay-TV
into one cheaper offering for cash-strapped consumers.
The bid by Vodafone - its second after a first offer was
rejected - fits with its new strategy of using some of the
proceeds from the $130 billion sale of its U.S. arm to invest in
its core European networks to allow it to offer bundled services
to consumers and offload traffic from its mobile networks.
In Spain, where a long recession has reduced the sums
consumers are willing to pay for telephony, Vodafone has been
working with Orange to build a fibre network in major
cities, mainly Madrid and Barcelona, to offer a wider range of
A deal for Ono could work well as the Spanish company is
more focused in smaller cities and rural areas and analysts say
it would be a stronger fit than with Liberty.
One source, who had been briefed on the Ono board's
discussions, said the directors had agreed to first carry out a
capital increase of 800 million euros and later sell existing
shares for a total of at least 200 millions euros.
Ono believes it has an enterprise value of around 7 billion
euros ($9.5 billion), including debt worth 3.4 billion euros.
Based on this price, about 25 percent of the company would float
on the stock exchange after the listing, the source said.