France Telecom Confirms $40 Billion Bid for Orange
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The acquisition creates a pan-European wirefree operator by combining Orange with Itineris and France Telecom's other wirefree businesses. The new company will have an anticipated 30 million controlled subscribers by the end of this year.
To avoid infringing regulations against monopolies, Vodafone was obliged to divest itself of Orange, which came as part of the package in its purchase of German firm Mannesmann.
Michel Bon, chairman and chief executive officer of France Telecom, said he believed the creation of "New Orange" under the leadership of Hans Snook would bring substantial benefits for employees, shareholders and customers, and for the parent company itself.
Hans Snook, chief executive officer of Orange, said that his company's vision had never been U.K-centric although Orange is best-known in the U.K. where it started.
"Today's agreement more than doubles Orange's scale, reach and capacity to innovate. We have a wealth of talent by combining France Telecom and Orange's wirefree businesses and the platform from which to build a leading global wirefree business," said Snook.
France Telecom will pay for the acquisition with 22.2 billion euros ($20.5 billion) in cash and 18.1 billion euros ($16.8 billion) in new France Telecom shares. It is also assuming 2.9 billion ($2.7 billion) euros of Orange debt, hence the total value of the enterprise is set at 43.2 billion euros ($40 billion).
After completion of the deal, Vodafone will have a stake of slightly less than 10 per cent in France Telecom. It will not, however, have any voting rights or board representation.
The French telco expects to buy back most of the France Telecom shares held by Vodafone after floating "New Orange" on the international markets.