Slaughter and May, Travers Smith shepherd Vodafone’s €5bn sale of Spanish arm to Zegona

Slaughters advises longtime client Vodafone as Travers Smith counsels listed TMT investor Zegona

Slaughter and May is advising longtime client Vodafone on the sale of its Spanish business to London-listed TMT investor Zegona Communications, repped by Travers Smith, for an enterprise value of €5bn. 

The sale is the second major deal for Vodafone since group chief executive Margherita Della Valle took over in April with a mandate to turn the company around and will see it exit a market that has produced lacklustre returns in recent years. 

Della Valle, who in May announced plans to cut 11,000 jobs as part of the turnaround, said the sale of Vodafone Spain was “a key step in right-sizing our portfolio for growth” and would enable the business to “focus our resources in markets with sustainable structures and sufficient local scale”.  

Zegona will fund the deal through €4.2bn of committed debt and €900m of financing from Vodafone in the form of preference shares. Zegona also expects to launch an equity raise of up to €600m and will consider a retail offer of up to €8m via PrimaryBid, Travers Smith said. 

The Slaughters team acting for Vodafone was led by corporate partners Victoria MacDuff and James Cook and included partners Duncan Blaikie (IP), Charlie McGarel-Groves (financing), Mike Lane (tax), Claire Jeffs (competition) and Philippa O’Malley (employment), alongside a supporting cast of counsel and associates. 

Meantime the cross-border Travers Smith team was led by funds department head Aaron Stocks and included corporate partners Mohammed Senouci, Tom Coulter and Ben Lowen and US securities partner Brent Sanders. 

Tax advice was provided by partner Madeline Gowlett and head of tax Russell Warren; technology and commercial advice on the inter-company and separation arrangements by partner Richard Brown, head of technology and commercial transactions Dan Reavill and partner Ben Chivers; and regulatory advice (including in relation to the EU foreign subsidies regulation) by partner Stephen Whitfield. 

News of the Vodafone Spain sale follows Vodafone announcing in June that it was planning a £15bn merger of its UK business with rival Three, with Slaughters again called in to advise Vodafone and Linklaters acting for Three and its owner, Hong Kong-based conglomerate CK Hutchison. 

At the start of this year Slaughters also acted for Vodafone in the sale of its Hungarian arm to local telecoms and IT group 4iG Nyrt and state-owned investment management company Corvinus Zrt for €1.7bn. 

For its part Travers Smith has advised Zegona, which was set up by former Virgin Media executives Eamonn O’Hare and Robert Samuelson in 2015 to invest in European TMT businesses, on its previous two transactions in Spain. It sold Spanish cable TV company Telecable to its rival Euskaltel in 2017, taking a stake in the enlarged group, which in turn was sold to Spanish telecoms heavyweight MásMóvil for €3.5bn in 2021.

Stocks commented: “We are delighted to have been able to facilitate another significant cross-border acquisition for Zegona… This deal represents the largest reverse takeover ever concluded on the London Stock Exchange and proof that there remain great opportunities to capitalise on the London Stock Exchange’s flexibility to list acquisition companies.”

Morgan Stanley, Robey Warshaw and Evercore are acting as financial advisers to Vodafone in connection with the deal, while Deutsche Numis is acting as lead financial advisor to Zegona. 

Vodafone’s longstanding GC, Rosemary Martin, retired on 31 March, to be replaced by easyJet’s former GC Maaike de Bie.

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