What was a rumour all weekend, has become official: Spain’s fourth major telecoms operator, MasMovil, has confirmed with Spanish market regulator CNMV the offer from the funds KKR, Cinven and Providence, via Lorca Telecom BidCo. The full cash bid for MasMovil from the consortium formed by the three investment funds would be at 22.5 euros/share. The price represents a premium of 20.2% over Friday’s closing price of 18.72 euros/share (capitalization of 2.466 billion euros). Providence is one of the Spanish telco’s main shareholders, with a 9.15% stake. At midday, the stock price skyrocketed over 20%.
The success of the offer is conditional on 50% acceptance plus 1 share. The management team, which owns 3% of the company, has agreed to the sale.
In the opinion of Alphavalue analysts, the operation “makes strategic sense and could add value to the company and the sector.”
“We do not rule out a price increase or even a counter-offer by CVC, which could launch a competing bid and the price could rise to 26 euros/share.”
For Bankinter’s experts, the price offered does not reflect MasMovil’s full growth potential.
“The value offered implies an EV/EBITDA 2021 ratio of 7.0x vs the 6.1x average for the telecoms sector in Europe. We believe that MasMovil deserves a higher premium, so we recommend not to accept the offer.”
They also do not rule out a counter-offer from other venture capital funds or another operator.
Since the launch of its convergent offer in 2017, MasMovil is the company which has captured the most market share in Spain, gaining 88% of new fixed broadband clients. Q1’20 results showed more than significant advances in a sector characterised by low growth and pressure on margins. In the quarter, the number of broadband subscribers increased 43% on a year-on-year basis (8% quarter-on-quarter) and postpaid mobile was up 18% year-on-year (5% quarter-on-quarter). The company reiterated its 2020-21 targets despite Covid-19: in 2020 EBITDA of €570M/600M, EBITDA margin 30%/32% and net capex of €295M; in 2021 EBITDA of €670M/700M, EBITDA margin 32%/34% and net capex of €255M.
