Shaikh Hamad Bin Abdulla Al Khalifa and Shaikh Mohamed
Batelco to acquire CWC units in $1bn deal
Manama, December 3, 2012
Batelco Group, the regional telecommunications operator with operations across six countries, has announced plans to acquire some units of British multinational telecommunications company Cable & Wireless Communications (CWC), including its Monaco and Islands division.
Batelco intends to raise up to $1 billion of debt through a bond issue and a term loan facility for the transaction with London-based CWC, which has operations in the Caribbean, Macau, Monaco, Panama and numerous small islands, said a statement from the company.
As per the deal, Batelco will acquire the entire CWC interest in The Maldives, Channel Islands and Isle of Man, the Seychelles, South Atlantic and Diego Garcia as well as a 25 per cent shareholding in Compagnie Monagesque de Communications (CMC), which holds CWC’s 55 per cent interest in Monaco Telecom, for a consideration of $680 million, the Bahrain telco stated.
This represents a multiple of 5.6 x proportionate EBITDA for the 12 months ending September 30, 2012. The acquisition is subject to Batelco and CWC shareholder approval, and respective consents and approvals in each of the markets as applicable, it said.
In addition, the two companies have entered into put and call arrangements with regard to CWC’s remaining 75 per cent interest in CMC, allowing Batelco to acquire a controlling interest in Monaco Telecom for an additional consideration of $345 million, it stated.
These options can be exercised within 12 months of closing of the acquisition, subject to satisfactory regulatory and other consents, including approval of the Principality of Monaco, said the Batelco statement.
In the event such consents are received within the above period, the total consideration for the entire Monaco & Islands division will be $1.02 billion, representing a multiple of 6.2 x proportionate Ebitda for the twelve months ending September 30, it added.
If the necessary consents are not obtained, the 25 per cent stake in CMC acquired as part of the acquisition will be sold back to CWC for $100 million pursuant to a further option arrangement between CWC and Batelco, said the statement.
Commenting on the deal, Batelco Group chairman Shaikh Hamad bin Abdulla Al Khalifa said, "This transformative transaction will see the Group emerge as a communications player of global relevance and Bahrain’s most diversified international company."
"With the acquisition of CWC’s Monaco and Islands Division, we will extend our reach and take our expertise to up to eleven new markets across the globe," he noted.
“We have been pursuing a strategy of diversification and growth in order to create a more profitable and cash generative communications group. This acquisition supports our strategy by adding four new cash generative businesses, which will, from the outset, serve to diversify and enhance our profitably and cash flows and complement our continued efforts to drive value and build further market leadership in our six existing businesses across the Middle East region.”
Group CEO Shaikh Mohamed bin Isa Al Khalifa said, “We are pleased to announce this acquisition, which will increase the scale and diversification of our operations. The Group will have the opportunity to operate, in collaboration with its new business partners, across 17 markets."
"We look forward to working closely with all the shareholders and management teams in these companies to ensure we continue to deliver value and innovation to customers and be recognized as market leaders," he added.
Shaikh Mohamed said besides helping Batelco grow its footprint and supporting growth into new markets, this transaction will also enable the group to enhance its position across current businesses.
"Our operations and customers in our home market of Bahrain and elsewhere will benefit from the transfer of know-how and innovation exchange between all operations. With added scale, we will also achieve greater synergies in areas such as procurement, investments in network infrastructure, applications and content, global roaming arrangements, talent management and executive leadership development,” the official stated.
Batelco Group is currently in the process of finalizing plans to raise the necessary funds for the acquisition. The Group will raise up to $1 billion of debt through a bond issue and a term loan facility for the transaction. Batelco Group has appointed Citigroup and BNP Paribas as its bankers to raise funds.
Batelco’s lead financial advisor for this acquisition is Houlihan Lokey. Citigroup also served as a financial advisor. Linklaters and Ernst & Young have been appointed as legal and accounting/tax advisers respectively, whilst Oliver Wyman was engaged to complete commercial and technical due diligence.
“As a result of this deal and the further diversification of our business we have the opportunity to deliver greater innovation and value to our customers across many markets whilst also enhancing our ability to maintain strong levels of profitability and to deliver on our commitments to shareholders,” Shaikh Mohamed added.-TradeArabia News Service