Slaughters and Linklaters dial in for Vodafone and Three’s £15bn UK merger 

Slaughters acts for Vodafone as Linklaters counsels Three UK and owner CK Hutchison in deal likely to face competition scrutiny 
Vodafone telecoms store front on Oxford Street in central London.

Ink Drop, Shutterstock

Linklaters and Slaughter and May have been called in to advise on the merger of Vodafone and Three’s UK businesses, a deal that is set to create the country’s largest mobile phone operator. 

Linklaters is advising Three UK and its owner, Hong Kong-based conglomerate CK Hutchison, on the matter while Slaughter and May is acting for Vodafone. 

The tie-up, valued at £15bn, is yet to be approved by regulators and shareholders but if completed would create a company with more than 27 million subscribers, a figure that would see it leapfrog the UK’s two current largest operators – Virgin Media O2, owned by Spain’s Telefónica and US company Liberty Global, and BT-owned EE. 

A Slaughters team led by corporate partners Victoria MacDuff, Roland Turnill and Richard Hilton has acted for longtime client Vodafone alongside partners Claire Jeffs and Will Turtle (both competition), Rob Sumroy and Duncan Blaikie (both inter-company and services), Mike Lane (tax), Chris Sharpe (pensions), Philippa O’Malley (employment and incentives), Edward Fife, Charlie McGarel-Groves and David Hay (all financing) and Nick Bonsall (financial regulation). They were supported by a large team of associates, with the firm highlighting the contributions of corporate associates Aleezeh Liaqat and Nick Johnston. 

Meantime at Linklaters a cross-practice team led by corporate partners Robert Cleaver and Hugo Stolkin has advised CK Hutchison and Three UK alongside TMT partners Georgina Kon, Marly Didizian and Rich Jones, tax partner Chris Smale and a supporting cast of 17 managing associates and associates. 

The planned Vodafone merger is the latest in a number of multi-billion pound deals in which Linklaters has acted for CK Hutchison, including its proposed £10.25bn acquisition of O2 UK back in 2015, which was blocked by the UK’s Competition and Markets Authority (CMA) and the European Commission the next year. 

Ofcom, the UK’s telecoms regulator, which works with the CMA, had been against any merger of the country’s four largest mobile network operators on the grounds it could lead to price rises for consumers but softened its stance last year, saying its position on a potential merger “would be informed by the specific circumstances of that particular merger, rather than just the number of competitors.”

Nonetheless the CMA confirmed to the BBC that it would examine Three’s merger with Vodafone, saying that with millions of consumers and many businesses relying on the services of the two companies it was “right that the CMA reviews the impact this deal could have on competition”. 

Completing the merger would be a major coup for Vodafone group chief executive Margherita Della Valle, who took over in April with a mandate to turn the company around after her predecessor, Nick Read, was ousted for failing to reverse a steep decline in the company’s share price during his four years at the helm.

Della Valle, who in May announced plans to cut 11,000 jobs as part of the turnaround, described the merger as being “great for customers, great for the country and great for competition” in a stock market announcement published today (14 June). 

Talks between the two sides have been running since autumn last year, with Vodafone to have 51% and CK Hutchison 49% of the combined business if the deal goes through. 

Vodafone and CK Hutchison emphasised the benefits of the tie-up, saying it would “deliver up to £5 billion per year in economic benefit by 2030, create jobs and support digital transformation of the UK’s businesses” and that “every school and hospital in the UK will have access to standalone 5G by 2030.”

According to the stock market announcement the combined firm will also invest £11bn in the UK over the next decade “to create one of Europe’s most advanced standalone 5G networks, in full support of UK government targets.”

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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