LONDON (Alliance News) - Zegona Communications PLC Wednesday confirmed it has terminated talks for a potential acquisition of Spanish mobile telecommunications firm Yoigo, following news that rival bidder MASMOVIL Ibercom SA had agreed to buy Yoigo.
Separately, the company reported a "strong" first quarter performance for its operating business Telecable, which it said is on track to deliver its full year growth guidance.
Telecable produced earnings before interest, tax, depreciation and amortisation of EUR16.6 million in the quarter to end-March, on revenue of EUR34.9 million. This compared to Ebitda of EUR16.0 million on revenue of EUR33.0 million the previous year.
Zegona said Telecable is on track to deliver full year mid-single digit revenue growth and double digit cash flow growth.
"We are encouraged by the continuing growth in the business, underpinned by the recent consumer price rise and progress in growing the mobile and business divisions. This performance, together with further evidence of price repair in the Spanish telecoms market and the improving economic environment, gives us confidence that Telecable will continue to deliver strong growth across its key financial metrics in 2016," said Chairman and Chief Executive Officer Eamonn O'Hare said in a statement.
On the Yoigo deal, Zegona said the transaction was "complex", with negotiations with the company's minority shareholders having been protracted and ultimately inconclusive. Additionally, the rival bidder MASMOVIL agreed an equity value for Yoigo that was at least 35% higher than Zegona's offer.
The company said that its offer had been based on "significant synergies" with Telecable, but also reflected challenges in Yoigo's business. "While we had developed robust solutions for each of these challenges, ultimately we were only prepared to acquire Yoigo at the right price given our disciplined valuation approach and focus on shareholder returns," Zegona said.
Shares in Zegona are suspended, and it said its shares will be readmitted to trading "as soon as reasonably possible".
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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Zegona Com (ZEG)