Hutchinson Whampoa raises £3.1 bn to fund O2 takeover
08 May 2015
Hong Kong tycoon Li Ka-Shing's conglomerate Hutchison Whampoa has raised £3.1 billion, from a collective of savings and pension funds, to finance its acquisition of the O2 mobile operator in the UK.
The company agreed to the acquisition of O2 from its Spanish owner Telefoìnica for £9.25 billion in March (See: Telefonica seals deal to sell British mobile unit O2 to Hutchison for $15.3 bn).
A further maximum of £1 billion would be due upon completion.
The company planned to combine the business with its existing UK network Three, for the creation of the UK's largest mobile operator with 33 million customers and the country's most extensive 4G internet service.
Friday saw Hutchison announce a deal for the sale of a third of the combined business to a multinational group of investors led by the Canada Pension Plan Investment Board (CPPIB), which would invest a £1.1 billion share alongside Singapore sovereign wealth fund GIC Pte, Caisse de dépôt et placement du Québec, Limpart Holdings, a wholly owned subsidiary of the Abu Dhabi Investment Authority, and Brazilian investment bank BTG Pactual.
Meanwhile, Hutchison Whampoa Limited said in a press release, Hutchison Whampoa Limited (HWL) parent of UK telecom operator Three, announced that it had entered into agreements with five leading institutional investors who would acquire stakes totaling 33 per cent in the aggregate in the combined businesses of Three and O2 UK for a total consideration of £3.1 billion.
The investors are Canada Pension Plan Investment Board, GIC of Singapore, Limpart Holdings Limited, a wholly owned subsidiary of the Abu Dhabi Investment Authority (''ADIA''), CDPQ of Quebec, Canada and BTG Pactual of Brazil.
Their investments are conditional and will occur concurrently with completion by Three of the acquisition of O2 UK from Telefónica and its combination with Three's businesses, which is in turn was subject to EU Competition approvals.
The full proceeds of their investments will be used, together with a committed bank facility of £6 billion, to fund the acquisition of O2 UK from Telefónica which was announced on 25 March 2015.
Commenting on the agreement Canning Fok, group managing director of Hutchison Whampoa, said, ''It is an honour to have such a strong collection of the world's largest and most sophisticated investors joining us as partners in building the combined business of Three and O2 UK, which will be the number 1 mobile operator in the UK with nearly 33 million customers.
''The investors share our vision and belief in the value of creating a business with the necessary scale to enable us to compete effectively in the UK marketplace and to provide even better service and innovation using the largest and most resilient and advanced mobile network infrastructure in the country.
"Like us, the willingness of these investors to commit substantial capital to this investment reflects continued confidence in the UK economy and its commitment to maintain and foster a dynamic and world leading telecommunications sector, as well as a vote of confidence in Europe's plans for a single market in digital communications, leading to increased investment in the telecoms sector.''