26 Jul 2022

Jones Day and Freshfields lead Orange Spain and MasMovil through €18.7bn telecoms merger

News of the combination comes after the companies entered negotiations in March

Jones Day has advised European telecoms giant Orange on the merger of its Spanish business with regional telecoms operator MasMovil, represented by Freshfields Bruckhaus Deringer, in a deal worth €18.7bn. 

The deal between Orange’s Spanish arm and Madrid-based MasMovil is based on a total enterprise value of €7.8bn for Orange and €10.9bn for MasMovil.

It is the result of exclusive talks that began in March, with Spanish heavyweights Pérez-Llorca and, according to Iberian Lawyer, Uría Menéndez, also called in to advise MasMovil. 

Under the deal terms, the combined entity will take the form of a 50-50 joint venture controlled by both Orange Spain and MasMovil with equal governance rights. Those terms also include the right to trigger an IPO and the option for Orange to take control of the combined entity by buying MasMovil’s shares at the IPO price. 

It is expected to close during the second half of 2023 at the latest subject to approval from the European Commission and other relevant administrative authorities. The two companies will continue operating independently until the deal goes live. 

A cross-border team from Jones Day’s offices in Madrid, São Paulo, Mexico City, Paris, New York and London assisted Orange on the €6.6bn financing it raised in connection to the combination, in what the firm called one of the largest European leveraged finance transactions so far this year. 

The Jones Day team that advised Orange was led by Luis Riesgo. The M&A team included Blanca Puyol and Raimundo Ortega in Madrid Artur Badra, who is based between Madrid in Sao Paolo. The firm's finance team, meanwhile, included Paris partners Sophie Chevallier and Diane Sénéchal, partner Lee Federman in London and partner Rory Hood in New York. 

Freshfields' team was led by Armando Albarrán, who currently heads up the firm's corporate M&A and capital markets groups in Spain. The firm previously represented private equity powerhouses Cinven, KKR and Providence in their 2020 consortium investment relating to a €3bn voluntary public takeover bid for the entirety of MasMovil’s share capital. 

Pérez-Llorca has advised MasMovil on competition matters with Freshfields. The team was led by Madrid-based competition partner Juan Jiménez-Laiglesia, with assistance from partner Pablo Figueroa and associate Alejandra González-Concheiro, both competition specialists. 

Once finalised, the latest combination could generate a potential €7.5bn in revenue and potentially give rise to a strong challenger to Telefonica, Spain’s number one telecoms company. 

Christel Heydemann, CEO of Orange said: “This deal paves the way for the creation of a joint company that combines the forces of Orange and MasMovil into a single, stronger operator that will enable investments in 5G and fiber, benefiting customers across Spain. I strongly believe that the creation of this new company is of fundamental importance for the Group, the Spanish telecoms market and for our customers.”

MasMovil CEO Meinrad Spenger added he believed the deal would “drive competition, digitisation and innovation in the Spanish market”.

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