Orange has confirmed a €3.4bn bid to buy Spanish broadband provider Jazztel, as it looks to compete with Telefónica in the country's telecoms market, the Financial Times reports.
The deal would mark it as the largest corporate acquisition for Orange in almost a decade. The FT say it will increase its Spanish broadband market share by 14% and mobile market share by 3%. Orange, the third-largest mobile group by revenue in Spain, would gain a further 1.5m broadband subscribers.
The French group has wanted to buy Jazztel to add fixed-line broadband customers to its primarily mobile operation in Spain, as it seeks to challenge Telefónica, which provides both wireless and wireline services to its customers in bundled deals over its extensive domestic network.
The Wall Street Journal report, however, that the second-biggest shareholder of Jazztel will not sell its shares to Orange unless the telecoms giant increases its current offer.
Vincent Rech, an analyst at London-based Alken Asset Management LLC, which owns just over 5% of the Madrid-based company, told the publication that the €13-per-share offer by Orange doesn't reward existing shareholders in line with potential gains derived from the combination of the firms.
Analysts at Spanish banking group Banco Sabadell, however, said that Alken's stance will have little bearing on Orange's bid. Sabadell said it is now lowering its rating on Jazztel stock to sell from buy, adding that Orange's offer is "very attractive".
Gavin Morris, a partner at Go Investment Partners, which owns 2.85% of Jazztel – according to FactSet data – also welcomed the bid. "Orange was clearly the partner offering the greatest synergies. It's a good offer, and the timing is right," said Morris.