According to a Reuters report, Vodafone and CK Hutchinson – the owner of Three – are close to announcing a merger in the UK. The news outlet said the deal could be announced either this Friday or early next week.
Apparently the deal will be consistent with what was reported last October – namely that Vodafone would own the majority of the combined group (51%) while Hutchinson would retain the remaining 49%.
It was also said that the new company would be worth about $18.6 billion, including debt.
pressure from shareholders
The story of the merger between Vodafone and CK Hutchinson has been going on for quite some time and triggered major changes in the market.
Some argue that former Vodafone CEO Nick Read resigned because he was unable to consolidate the UK market, which was one of his main goals. This inability frustrated shareholders, leading to a change at the top.
The new CEO, Margherita Della Valle, stepped in and felt pressure to improve the company’s performance. Less than a month ago, Della Valle announced that the company would cut 11,000 jobs to become more agile in the market.
The deal also raised some concerns, as regulators didn’t take kindly to the idea of reducing the number of carriers in a large market like the UK. The deal is still subject to regulatory approval, Reuters added.
On the other hand, Frank John Sixt, Hutchinson’s CFO, said it was “extremely difficult” to close the deal.
If the deal goes through, the resulting group will become the largest mobile operator in the UK, with around 27 million customers. That would put it ahead of BT’s EE and VM O2, as well as Liberty Global, according to Reuters.
Above: Reuters
