Three owner to sell one-third stake of UK mobile business to fund O2 deal
It has been revealed that five investors will buy a stake in the combined Three-O2 business as the acquisition deal reaches its conclusion.
The parent company of Three, Hutchison Whampoa, will be selling off one-third of its mobile business in the UK to put together a fund of £3.1bn towards its purchase of O2. A stake in the new combined business will be available to the five international investors; however, the investment is conditional on the purchase of O2 being completed. The company will also be using a bank loan of £6bn to complete the purchase.
Investments of £1.1bn each will be made by Singapore’s GIC and the Canada Pension Fund, with the remaining investments coming from CDPQ of Quebec, the Abu Dhabi Investment Authority and BTC Pactual of Brazil.
The group MD of Hutchison Whampoa, Canning Fok, said that this group includes some of the world’s largest investors and that their investment will help to make Three-O2 the largest mobile operator in the UK. The investment will also help the company to provide a stronger network infrastructure and a better overall service.
The talks to buy O2 commenced in January this year and the two companies agreed terms in March. The initial payment to O2 parent company Telefonica will be £9.25bn, with a further £1bn paid at a later date. The companies have not yet completed EU Competition approvals for the purchase, however, which could take as long as one year.