France Telecom announced today its widely anticipated purchase of Spain's third-largest mobile operator Amena, in a complex cash and shares deal which it said would boost earnings after a year.
France Telecom said it would buy 80 per cent of Amena for €6.4 billion ($7.72 billion), but the deal would give it assets worth €8.9 billion ($10.74 billion) which includes €1.7 billion of tax advantages.
The acquisition is France Telecom's biggest foreign foray in more than four years. It signals a further pick-up in telecoms mergers and acquisitions, coming fresh on the heels of the purchase by Eircom of the country's third biggest wireless operator Meteor for €420 million via a share issue on Monday.
France Telecom's Amena deal will be financed partly with €3 billion worth of shares through a capital increase to be reserved for the sellers or channelled through a public offering.
Amena is part of Auna, which has a fixed-line business and whose main investors include Endesa, Union Fenosa SA and bank Santander.
The deal - which values Amena at €10.6 billion in terms of enterprise value - is expected to boost France Telecom's free cash flow per share and net income per share before amortisation of goodwill after 12 months, the French operator said in a statement.
It said its key financial targets for the ratio of net debt to EBITDA for end-2005 and end-2008, as well as its dividend objective for 2006, were "expected to be maintained".
France Telecom said it aimed to achieve synergies worth more than €1.1 billion in present value terms, boosting free cash flow by more than €130 million a year from 2008.