France Telecom Confirms $40 Billion Bid for Orange

[May 30] As expected, France
Telecom

confirmed Monday that it has agreed to acquire mobile operator
Orange
from Vodafone
in a deal worth 43.2 billion euros ($40 billion).


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.


“New Orange” (in reality it will still be called Orange)
will have listings in London, Paris and New York in
late 2000 or early 2001.


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.

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