The British telecommunications group announced the €32-a-share deal for Frankfurt-listed Vantage Towers AG in a statement Wednesday that confirmed an earlier Bloomberg News report. The price represents a 12% premium to Vantage’s closing price on Monday, the day before the report.
Under the deal’s terms, Vodafone will move its 81.7% holding in Vantage into a joint venture with KKR and GIP. The JV will then make a takeover offer for outstanding shares in Vantage in what could be the biggest take private of a German company on record, data compiled by Bloomberg show. RRJ Capital, the second-largest minority investor in Vantage, will support the offer.
The KKR and GIP consortium will eventually own as much as 50% of the JV.
Shares in Vantage rose as much as 11% on Wednesday. The stock was up 9.9% at 11:40 a.m. in Frankfurt, giving the company a market value of €16.3 billion. Vodafone’s stock was down 1.9% in London.
Saudi Arabia’s Public Investment Fund is helping to fund the deal, according to people familiar with the matter, who asked not to be identified discussing confidential information. A representative for PIF declined to comment.
“This transaction successfully delivers on Vodafone’s stated aims of retaining co-control over a strategically important asset, deconsolidating Vantage Towers from our balance sheet to ensure we can optimise its capital structure and generate substantial upfront cash proceeds,” Vodafone’s Chief Executive Officer Nick Read said in the statement.
KKR and GIP had been competing with a host of other financial and strategic bidders for Vantage, including a consortium of Spanish telecommunications group Cellnex Telecom SA and Singapore’s sovereign wealth fund GIC Pte.
Network towers are helping dealmakers defy a near-30% slowdown in global mergers and acquisitions activity this year. Telecom operators are shifting the assets to help raise funds for fiber-optic rollouts and wireless upgrades, and are finding willing buyers in the form of investment firms seeking predictable returns in volatile markets.
Bloomberg News reported this week that PIF is among suitors weighing a final bid for network towers being sold by Qatari telecom firm Ooredoo QPSC that could be valued at as much as $5 billion. And in Europe, private equity firm EQT AB is seen as the frontrunner to acquire a stake in French tower owner TDF.
Earlier this year, KKR and GIP missed out an investment in Deutsche Telekom AG’s tower business, with a stake eventually being sold to Brookfield Asset Management Inc. and DigitalBridge Group Inc.
UBS Group AG and Robey Warshaw LLP advised Vodafone on the deal.