(Alliance News) - Zegona Communications PLC said Monday its investee Euskaltel SA has received a EUR11.17 per share takeover bid from MasMovil Ibercom SAU, a portfolio company of private equity funds KKR, Providence and Cinven.
Zegona is the largest shareholder in Spanish telecommunications provider Euskaltel, with more than a 21% stake in the firm.
MasMovil's offer at EUR11.17 per share in cash values Euskaltel's equity at EUR2.0 billion, equating to an enterprise value of EUR3.5 billion. This values Zegona's stake at EUR428 million.
The deal represents a return on Zegona's net invested capital of 87%, with an underlying asset value of GBP1.70 per share, which represents an 80% premium to Zegona's closing share price on Friday of 94.5 pence.
Zegona was trading 32% higher in London on Monday morning at 124.50p each.
Euskaltel's three largest shareholders - Zegona, Kutxabank and Alba - who own over 52%, have entered into irrevocable undertakings to tender all their shares
Zegona Chair & Chief Executive Eamonn O'Hare said: "When we originally invested in Spain in 2015, we identified the opportunity for substantial value creation, with further upside potential from industry consolidation.
"In 2019, we became Euskaltel's largest shareholder and, through the introduction of Jose Miguel Garcia as CEO and board representation, we implemented our plan to drive significant change in the business. This included realising synergies from the combination of the three northern Spanish CableCos, getting the combined business back to growth and expanding nationally by launching the Virgin telco brand. Today's offer underscores the success of our strategy in Spain and provides significant value creation for Zegona shareholders."
By Paul McGowan; paulmcgowan@alliancenews.com
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Zegona Com (ZEG)