Vodafone, Hutchison to announce UK merger as soon as Friday
Technology
Vodafone, Hutchison to announce UK merger as soon as Friday
HONG KONG/LONDON (Reuters) - Vodafone (VOD.L) and CK Hutchison (0001.HK) are in the final stage of agreeing to merge their British operations, with an announcement expected as soon as Friday or early next week, three sources have told Reuters.
Shares in Vodafone jumped 3% on the news on Wednesday.
Vodafone will own 51% and Hutchison 49% of the combined group, which could be worth around 15 billion pounds ($18.6 billion) including debt, in line with an announcement made by Vodafone in October, one of the sources said.
The respective stakes would be achieved by adjusting the ownership of debt rather than exchanging cash, the companies said in October.
Talks about the deal to create Britain's biggest mobile operator have been protracted. Hutchison's chief financial officer Frank John Sixt said last month that getting it over the line was proving to be "extremely difficult".
Vodafone's new Chief Executive Margherita Della Valle is under pressure to agree on deals in major markets to improve the pan-European and African operator's performance.
Her predecessor Nick Read identified Britain as one of four markets that would benefit from consolidation, but a lack of progress frustrated shareholders, leading to his stepping down in December.
The tie-up will create Britain's biggest mobile operator with about 27 million customers, overtaking BT's (BT.L) EE and VM O2, owned by Telefonica (TEF.MC) and Liberty Global (LBTYA.O).
The deal will face intense scrutiny from regulators who have previously opposed deals that reduce the number of networks in major markets from four to three.
Vodafone and Hutchison have argued, however, that the deal would benefit consumers by creating a network with the scale to roll out full 5G and expand broadband connectivity.
Hutchison has said it does not cover the cost of its capital in Britain, potentially hampering its ability to invest.
Sources told Reuters in April that the companies could commit to network investments as part of their approach to regulators.
Hutchison's senior leadership met British government officials in March to seek political support for the deal, the sources said. A few weeks later, the government confirmed its "openness to market consolidation".
Hutchison and Vodafone declined to comment.
