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Cant be bad VODs M/C is only £18.5b and were getting £8b for Italy alone??
There will be a Feeding Frenzy this morning,
She’s Going To Blow The Doors OFF 🥳🥳
🚀 🚀 🚀 🚀 🚀
Plus the €5 billion from Spain. Let's hope the market looks more favourably on VOD from here.
Its a debt and cash free purchase vs the MCAP which includes debt, so not a like for like comparison. Anyone know how much debt Vodafone Italy has on its books? As we will sill "own" that debt, the net position 8b less any italy debt is what should be compared to the MCAP
" the net position 8b less any Italy debt is what should be compared to the MCAP"
good point , Beo 1...but technically it is the net debt , as any cash on the books in Italy will stay with VOD too
No it wont, read the RNS. The offer is 8b for a debt free Vodafone Italy. Not that they will pay 8b and take on the debt. I've been involved in a couple of acquisitions with my old company and we bought a company for £150m free of debt and cash. the company had a loan in place for £150m so essentially we bought the equity for £1. as they received £150m but then had to pay off there loan as the purchase agreement was based on it being debt free.
Lol Beo, & who's books do you think the debt is ultimately on ffs !!!
Us? I dont get your point or you misunderstood mine.
we are getting $8b for a company free of debt. Meaning we have to use some of that $8b to pay down the Italy proportion of that debt. Whereas some others were suggesting we were getting $8b and the debt in Italy would move across. So all Im trying to point out is that the headline $8b isnt the accretive cash position to vodafone in this instance based on the RNS
Beo looking at the segmental results and analysis, they don't appear to allocate Debt to specific businesses within the group, at least I couldn't find any reference to it. Vodafone appear to account for their debt in the Group Cash Flow statement, so Vodafone will receive the full amount under this deal and any debt will likely be accounted for elsewhere.
As they are set up as different entities in different companies, 100% there would be some debt against Italy specifically on the Statutory accounts. EG the Vodafone Limited (Vodafone UK) has £2.5b on inter company loans associated with it. Which I got from companies house, but I dont know if Italy do the same.
On a related note, not all the Liabilities in the gross debt value are Loans, some are the finance lease payable outstanding values, so some of the "debt" we have will transfer over, but any of the Loans wont.
According to the 2023 Annual Report( p137) Italy had 10.235 billion euro in non-current assets on the books
..so does that suggest they will have to write down 2 billion euros if they sell the assets for 8 billion euros
All in all it doesn't sound like a good deal , but competition is squeezing them year on year
Lease Liabilities are accounted for in EBITDAal, so those Liabilities would just go with the business anyway as they are an operational expense rather than Financial Debt.
But that debt will include working capital debt and Finance Lease debt (which are operational debt and not strictly Debt for the purposes of the acquisiton) EG IN the UK total Current & Non Current debt was £5.9b but the real non operational debt was £2.5b, Italy will be the same. There is zero chance they take on our Lease's from the P&L side and not transfer over the liability.
Actually the number you quoted wasn't the liabilities. so its the net asset value + loan debt (added back as it will be in the net asset value) that we would have to write off against the 8b proceeds (but not the non current assets, it would be non current assets + current assets - working capital debt - finance lease debt, eg the net assets + loan debt i mentioned earlier)
The bit I'm struggling with, is we are getting 8b proceeds but the debt is our issue, whereas Illiad offer was 8.5b combined consideration but we got to keep 50/50. or am I missing something here. Don't understand how this was the better of the 2 offers.
" The proposed deal with Swisscom could have a much higher degree of certainty over completion, as it is expected to be reviewed only by Italian authorities, according to a person familiar with Vodafone’s thinking.
A merger with Iliad was believed to fall under the remit of Brussels’ regulator, making it potentially more challenging.
Swisscom would pay cash in a deal that would value the Italian business at €8bn on an enterprise basis.
The deal with Iliad would have provided the company with €6.6bn in cash and a shareholder loan of €2bn. It valued Vodafone Italia at €10.45bn."
https://www.ft.com/content/e49ad29e-0004-458a-9bc9-8e8b5b71e50e
Beo
Doubtless you are an extremely clever well qualified chap who's been frontnline in an M&A situation.
Unfortunately I don't have your experience and knowledge.
To keep it simple may I ask how much debt do you guesstimate may have been passed from Italy to Vod UK
Hahaha once again your completely wrong lawerence you clown
It started well King5hott , you 🔔 End
If i had to guess I'd say about 2b Eur, UK is 2.5b but Italy is 2/3 of the size, but Italy operates at a return below the cost of capital which should translate to a higher debt value comparatively to UK.
But, I've read some news articles where it say's the 8b eur includes them taking on the debt, but the RNS said they are buying if "free" of debt, so we are either getting 8b to the net debt position or 6b (based on 2b loan estimate)
"If i had to guess I'd say about 2b Eur, UK is 2.5b but Italy is 2/3 of the size"
Beo no doubt you have a far greater in depth understanding of accounts than I do, but are you overcomplicating something that's simple. Does Italy have any Financial Debt? Because I can't see anything in Vodafone's documentation mentioning any Financial Debt in respect of Italy, with all the Debt accounted for at Group level within the Free Cash Flow calculation.
Italy will have Liabilities, like leases, but they will transfer with the business along with things like Spectrum licences. Is it not reasonable to assume that Vodafone will receive €8 Billion in cash, keep hold of any debt at Group level and Swisscom will take ownership of any Liabilities directly associated with the Italian business onto their books?
In the RNS it says the deal will go through on a "debt and cash free basis ", so I assume Vodafone wont transfer any debt onto the Italian business as part of the deal, and Vodafone will receive any outstanding cash on the balance sheet when the deal closes; So Vodafone will receive sale cash of €8 Billion plus whatever cash may be sitting on the Italian business balance sheet when the deal goes through; With any liabilities, like leases, then becoming the responsibility of Swisscom.
Does that make sense?
Yes, it does make sense.
On the group accounts the debt numbers would be the actual debt from external providers and yes thats sat in the group accounts. The Group holding company will then inter company loan X amounts to the individual entities (eg Vodafone Ltd), that debt will not be part of NewCo Italy. so therefor the asset on the holding company will be £0 but the actual debt with the finance company will still be there till we pay it. Based on the UK i estimated the Italy inter company loan to be about 2b eur but it is a guess.
Next week, Beo1 will teach us profit and loss :)
Nice little rug pull today, classic FTSE.