French telecommunication company Orange (ORAN) is now aiming for global expansion through strategic acquisitions. The company is looking forward to acquire Spanish telecommunications provider, Jazztel, for €3.4 billion or $4.4 billion.
Jazztel offers broadband services along with fixed-line and mobile phones to enterprise and consumer markets in Spain. The company boasts around 1.4 million broadband and fixed-line connections along with 1.16 million mobile users.
In terms of financials, in 2013, Jazztel generated €1.04 billion in revenues, a substantial part of it arising from residential access lines.
Reportedly, Jazztel declared that Orange has offered it an acquisition deal for €13 per share, which represents a premium of 8% on its market value before its stocks were suspended by Spanish stock market regulator following a price rise of 12% on Monday trading.
Further, the deal would entail Orange seeking majority of the rights in the acquired company. Moreover, Jazztel will not seek any investment plans pertaining to the takeover of Yoigo, the Spanish mobile unit of TeliaSonera.
Going by the reports, Jazztel’s chairman and its largest shareholder with 14% stakes in the company, Leopoldo Fernández Pujals, showed interest in Orange’s proposition and eventually accepted it. If the acquisition emerges successful, Orange is likely to witness a substantial growth in market share in Spain, wherein it already serves as the third largest wireless provider, after Telefónica (TEF) and the Vodafone Group (VOD).
Going forward, the proposed deal would mean another effort by Orange to consolidate business as Telefónica and other European giant carriers are also on a hunt to take over smaller players and swap assets so as to grow inorganically and expand within the highly saturated telecom sphere.
Orange currently has a Zacks Rank #3 (Hold).
Other Stocks
Better ranked stocks in this sector include China Mobile Limited (CHL), which has a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment