Private equity-backed bid for Everything Everywhere under consideration?

18 Jun 2012

An audacious bid to acquire Everything Everywhere, the joint venture formed between the UK mobile network operations of France Telecom-Orange (FT) and Deutsche Telekom (DT), may be on the cards, according to the Press Association, which cites reports by both the Sunday Times and the Sunday Telegraph. Private equity house KKR, which owns major retailers Boots and Pets at Home, is believed to be in early-stage stalks with the two European telecoms giants regarding a possible GBP8 billion (USD12.6 billion) deal for the mobile joint venture, with Virgin Mobile founder Tom Alexander and former Vodafone CEO Arun Sarin thought to be heading up KKR’s negotiations team.

Such claims come after reports at the end of last week that Mr Alexander, who had actually overseen the merger of T-Mobile UK and Orange UK as the CEO of the latter, was looking to put together a private equity-backed bid for Everything Everywhere. The Financial Times claimed last Friday that the executive had held discussions with a number of private equity groups, including Apax and KKR, with a view to finding financial support for the bid. The report also said that Mr Alexander had already approached both DT and FT to ascertain whether they may be interested in a deal, amid suggestions that the German company in particular may be open to disposing of the unit as part of a wider disposal of non-core businesses.

In response to the latest developments, the Press Association cited an Everything Everywhere statement as noting: ‘We have a clearly articulated, five-year plan for growth under the ownership of our shareholders France Telecom and Deutsche Telekom, and we are delivering on that plan … We would not comment on any possible future shareholder structure of our business.’

As noted in TeleGeography’s GlobalComms Database, September 2009 saw the announcement that DT and FT had entered exclusive negotiations aimed at merging their respective British mobile operations in a new company in which each would hold 50%. The French and German parent companies claimed that the proposed combined entity would be better placed to invest in new services and to exploit new technologies, while also arguing it would be better equipped to compete with both O2 and Vodafone. Two months after word of the negotiations first came to light, in November 2009 the two European parent companies signed a final binding agreement to combine their respective British subsidiaries, and the deal was subsequently approved by the European Commission’s (EC’s) Competition Commission in March 2010, subject to a number of conditions including the combined operator relinquishing of a quarter of its spectrum in the 1800MHz band. The merger was formally completed on 1 April 2010.

United Kingdom, Deutsche Telekom (DT), EE, Orange Group