It's Official - Vodafone-CK Hutchison Finally Discloses Merger Deal Of UK Businesses

Vodafone Group PLC VOD inked a deal with CK Hutchison Group Telecom Holdings Limited (CKHGT) to merge their UK telecommunication businesses. 

CKHGT is a subsidiary of CK Hutchison Holdings Ltd CKHUY CKHUF.

Post-merger of Vodafone UK and Three UK, Vodafone will own 51% of the combined business, and CKHGT will have the remaining 49%.

Per the terms, Vodafone UK will pay £4.3 billion and Three UK £1.7 billion to get ownership in the combined business. 

The combined company's initial total debt is expected to be about £6.0 billion, of which £1.7 billion will be refinanced.

The enterprise value of the combined company is expected around £15 billion.

The transaction is anticipated to deliver over £700 million of annual cost and capex synergies by the fifth full year post-deal closure, with an implied NPV of over £7 billion.

Also, the merged company expects to incur integration costs of around £500 million post-transaction completion, with the majority anticipated in the first five years.

The current CEO of Vodafone UK, Ahmed Essam, will assume the CEO role in the merged company, while the current Three UK CFO Darren Purkis will take the role of CFO of the combined company.

The transaction is expected to close by 2024, subject to regulatory and shareholder approvals.

The combined business will invest over £6 billion in the first five years and £11 billion over ten years in the UK to create one of the leading 5G networks in Europe.

"The merger is great for customers, great for the country and great for competition. It's transformative as it will create a best-in-class – indeed best in Europe – 5G network, offering customers a superior experience. As a country, the UK will benefit from the creation of a sustainable, strongly competitive third scaled operator – with a clear £11 billion network investment plan – driving growth, employment and innovation. For Vodafone, this transaction is a game changer in our home market. This is a vote of confidence in the UK and its ambitions to be a centre for future technology," said Margherita Della Valle, Vodafone CEO.

Also Read: Vodafone Forms Strategic Alliance With Its Biggest Shareholder; Adds Board Member

Price Action: VOD shares are trading higher by 1.26% at $9.26 on the last check Wednesday.