O2 UK CEO tipped to lead GBP8.5bn management buyout

18 May 2016

O2 UK chief executive Ronan Dunne is exploring the possibility of a GBP8.50 billion (USD12.30 billion) management buyout attempt, the Daily Telegraph reports, following the collapse of CK Hutchison’s takeover bid for the Telefonica-owned cellco. The broadsheet claims that Dunne has been approached in recent weeks by potential private equity sponsors aiming to carry out what would be the largest UK leveraged buyout since before the financial crisis. One consortium interested in buying O2 is said to be led by Tom Alexander, the former CEO of Orange UK, while other interested parties include the private equity firms Apax and CVC Capital Partners.

Investment bankers working on the proposal have pegged O2’s valuation at GBP8.50 billion, short of the GBP10.25 billion that Hutchison was willing to pay, citing the savings that the Hong Kong-based enterprise would have made by merging O2 with Three UK. The discussions are understood to not currently involve Telefonica, as the Spanish giant remains bound by an exclusivity agreement with Hutchison until the end of June – unless the two sides agree to walk away sooner.

United Kingdom, Apax Partners, O2 UK, Telefonica