By Andrés González and Julien Toyer
MADRID, March 7 British telecoms group Vodafone
has reached a preliminary deal to buy Spanish cable
group Ono after raising its initial bid for the company, two
people with knowledge of the discussions said on Friday.
The private equity-backed Ono, which sells fixed and mobile
phone, TV and internet services, had been preparing a listing
that would value the company at 7 billion euros ($9.6 billion),
including debt. The plan would be cancelled if Vodafone's bid is
Sources said Vodafone's bid would have to be substantially
higher than that value to persuade Ono to drop the listing.
Vodafone, which is already present in Spain as a largely
mobile operator, held talks and made an initial offer to some of
Ono's private equity owners in January, sources earlier said.
Another round of talks took place on Thursday, the two
"A meeting took place yesterday between the shareholders and
(Vodafone Chief Executive) Vittorio Colao. The due diligence
will start this weekend in order to make the offer binding,"
said one of the sources.
A second source said Ono's private equity shareholders told
Vodafone at the meeting that the offer would have to be
"substantial" and come before March 13, when the cable group is
due to formally go ahead with a planned initial public offering
to list on the Madrid stock exchange.
Both Ono and Vodafone declined to comment.
Ono has 1.9 million customers on its cable network that
covers 70 percent of Spain, or 7.2 million households out of a
total of 16 million.
Having built the network later than other cable and telecom
companies, Ono boasts of having broadband speeds of up to 200
megabits per second, or up to 20 times the average speeds of
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.
To win over Ono's shareholders and convince them to shelve
the planned IPO, Vodafone would have to make an offer
"substantially higher than the previous ones," said the second
For Vodafone, a purchase of Ono would be its third
acquisition in fixed broadband in Europe in two years. The deals
are aimed at improving its networks and shoring up its European
businesses following the $130 billion sale of its U.S. arm in
Vodafone boss Colao said recently the group could have the
capacity to spend $30 billion to $40 billion on acquisitions in
coming years and no deal should be too big if it makes strategic
(Reporting by Andres Gonzalez and Julien Toyer; Writing by
Leila Abboud; Editing by Fiona Ortiz and Elaine Hardcastle)