The revival in big deals gained momentum yesterday as buyout firms accelerated funding talks for possible £10 billion (€11.6 million) bids for EE, the UK's largest mobile phone operator. A deal, should it occur, would be the biggest private equity-backed acquisition in Europe since the financial crisis.
Talks have intensified in the past week in the wake of a $24 billion buyout of computer maker Dell and Tuesday's $23 billion takeover of Virgin Media, which raised the funds' hopes of securing a £7 billion debt package to back the acquisition, people with knowledge of the talks said.
A consortium of Apax and KKR and another led by Blackstone and CVC Capital Partners are working on competing offers, these people said. The groups are looking at using about £3 billion of their own equity to fund the deal. They are likely to seek co-investments from fund investors, they said.
In a move mirroring the Dell deal, the potential bidders are also working on plans that would see EE's owners France Telecom and Deutsche Telekom keep a stake of 15 per cent to 20 per cent.
A £10 billion leveraged buyout of EE would be the largest such deal in Europe since KKR took UK pharmacy chain Alliance Boots private in 2007 for £12 billion.
Lending banks are looking into the issuance of a US high-yield bond to partly fund a bid for EE, formerly called Everything Everywhere.
Deutsche Telekom and France Telecom have said their preferred plan was to launch an initial public offering for EE. However, the buyout firms are hopeful that with cheap and plentiful financing, they will match the owners' price. Apax, Blackstone, CVC and KKR declined to comment. - (Copyright The Financial Times Limited 2013)
