Vodafone and Melita announce merger into ‘combined company’

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Vodafone Malta and Melita announce merger into 'combined company'Vodafone Malta and Melita have announced a merger agreement to create a new “fully integrated communications provider in Malta.”

The transaction, they said, is conditional on approval from the Malta Competition and Consumer Affairs Authority and is expected to close in the second half of the 2017 calendar year.

In a statement they said that the Combined Company’s mobile and enterprise business will operate under the Vodafone brand, distribute a wide range of services including Vodafone’s global portfolio of products and services and benefit from access to Vodafone’s extensive expertise in mobile and fixed operations worldwide.

They said that the Combined Company will be in a stronger position to compete with the fully integrated incumbent, GO, “ensuring sustainable consumer choice over the long term.”

“It is expected that the Combined Company will be able to be able to generate cost synergies through the rationalisation of overlapping activities and greater network investment efficiency as the Combined Company introduces 4.5G, and subsequently 5G, mobile networks and gigabit-capable fixed networks.”

The current shareholders of Melita Apax Partners and Fortino Capita, will own 51% of the Combined Company and Vodafone Europe B.V. (“VEBV”), the current shareholder of Vodafone Malta, will own the remaining 49%2 at completion.

The statement said that the transaction values Vodafone Malta at an enterprise value of €208 million, equivalent to multiples of 6.8x EV/2016 EBITDA and 15.1x EV/2016 OpFCF. The transaction values Melita at an enterprise value of €298 million, equivalent to multiples of 8.9x EV/2016 EBITDA and 15.3x EV/ 2016 OpFCF3.

The Combined Company’s net debt is expected to be approximately €345 million and Vodafone will receive an estimated cash payment of €120 million which will be used for general corporate purposes. Melita’s shareholders will receive an estimated cash payment of €33 million, at completion, they said.

The statement continued by saying that the Combined Company will not be consolidated in Vodafone’s accounts and will be reported on an equity accounting basis after completion of the transaction. The transaction is not expected to have a material impact on Vodafone Group’s free cash flow or earnings.

“The Melita shareholders intend to appoint the current CEO of Melita, Harald Rösch, as CEO of the Combined Company and Vodafone intends to appoint the current CFO of Vodafone Malta, Caroline Farrugia, as CFO of the Combined Company. Vodafone will announce a new role for Amanda Nelson, the current CEO of Vodafone Malta, in due course,” they said.

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