Hefty bill

20 May 2016 By Fiona Maharg-Bravo

Private equity is reportedly circling Telefonica’s local unit after Brussels blocked a sale. That would be one of Europe’s largest-ever leveraged buyouts. The numbers might just add up – if the buyers can get O2 for a reasonable 8.5 bln stg or so, and then lift margins.

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Private equity is reportedly circling Telefonica’s local unit after Brussels blocked a sale. That would be one of Europe’s largest-ever leveraged buyouts. The numbers might just add up - if the buyers can get O2 for a reasonable 8.5 bln stg or so, and then lift margins.

Telefonica’s new Chairman Jose Maria Alvarez-Pallete said on May 12 the company would enter a “period of reflection” about its British mobile phone unit O2, after the European Commission blocked a 10.3 billion pound ($15 billion) sale to CK Hutchison.

Private equity groups Apax Partners, CVC Capital Partners and KKR are examining a 10 billion pound bid for O2, Sky News reported on May 12, citing “City sources”. Meanwhile, the Financial Times said Tom Alexander, the former chief executive of rival network operator EE, was talking to financial institutions about creating a consortium to bid for O2.

On May 15, the Daily Telegraph reported O2 Chief Executive Ronan Dunne was exploring an 8.5 billion pound management buyout.

Europe’s largest ever leveraged buyout is the KKR-backed takeover of Alliance Boots in 2007 for $21.4 billion, Thomson Reuters data shows.

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