Sale of Orange to France Telecom
Vodafone AirTouch PLC
30 May 2000
VODAFONE AIRTOUCH AGREES SALE OF ORANGE TO FRANCE TELECOM
Vodafone AirTouch and Mannesmann (together the ''Vodafone
AirTouch Group'') announce that they have reached agreement for
the sale of Orange plc ('Orange') to France Telecom ('France
Telecom').
The transaction values Orange's equity at approximately £25.1
billion assuming that the net debt of Orange at 31 March 2000 was
£1.8 billion. In addition, France Telecom will assume Orange's
liability of £4.1 billion in respect of its UK 3G licence. The
consideration will be satisfied by:
* A cash payment of £13.8 billion to be paid on completion of
the sale, subject to adjustment for the actual net debt of
Orange at 31 March 2000.
* 129.2 million France Telecom shares valued at £11.3 billion.
France Telecom will repurchase 15.4 million of these shares at
completion in exchange for a loan note valued at £1.3 billion,
redeemable no later than 31 March 2001. Vodafone AirTouch's
remaining holding of 113.8 million France Telecom shares, valued
at £10.0 billion, will represent 9.99% of the outstanding share
capital of France Telecom. These shares will not be voted.
The non-cash consideration, comprising the shares and the loan
note, is underwritten by France Telecom at £8.4 billion.
No tax is expected to be payable on the proceeds.
The Boards of Mannesmann and Vodafone AirTouch consider that the
offer from France Telecom represents a more attractive solution
to the required disposal of Orange than a demerger and is in the
best interests of shareholders because:
* The terms offered by France Telecom value Orange's equity at
a 28% premium to the value of Mannesmann's original offer
and a 56% premium to Orange's equity value immediately
before that offer.
* The proceeds will place the Vodafone AirTouch Group in a
strong financial position to bid for 3G licences across
Europe.
* If approved, the sale to France Telecom should also complete
the disposal of Orange more rapidly than a demerger.
The agreement is conditional, inter alia, on the following:
* The European Commission agreeing, pursuant to Vodafone
AirTouch's undertaking in Case No Comp/M1795 Vodafone
AirTouch/Mannesmann (the 'Undertaking'), that Vodafone
AirTouch is permitted to sell Orange to France Telecom;
* The European Commission clearing the transaction under the
European Merger Control Regulation; and
* France Telecom shareholder approval. The controlling
shareholder has indicated that it intends to vote in favour
of the transaction.
The Vodafone AirTouch Group intends to dispose of its stake in
France Telecom over the next two years in an orderly manner. As
part of these arrangements:
* France Telecom has granted the Vodafone AirTouch Group put
options over its shareholding which, when taken with the
loan notes, give Vodafone AirTouch downside protection of
£8.4 billion.
* The Vodafone AirTouch Group has granted France Telecom a
call option on its France Telecom shares exercisable at the
higher of market or issue price. The call option can be
exercised if the Vodafone AirTouch Group decides to sell its
shares or exercise its put option.
* The Vodafone AirTouch Group may sell its France Telecom
shares in the market, subject to a six month lock-up period
following completion. France Telecom has agreed to provide
the Vodafone AirTouch Group marketing support for such
market sales.
* The put and call options are subject to cap and floor
arrangements which limit the Vodafone AirTouch Group's
downside on the non-cash consideration received to £8.4
billion and limit the upside to £14.2 billion.
Orange is a leading UK mobile telecoms network, together with
mobile telecoms operations in Belgium, Austria and Switzerland.
According to the latest publicly available information, the net
assets of Orange as at 30 June 1999 were £(377.0) million, and
the loss before tax attributable to these assets in the preceding
12 months was £73.5 million.
Although the Vodafone AirTouch Group expects to complete the
transaction by the end of August, given Vodafone AirTouch's
obligations to the European Commission under the Undertaking and
the conditionality of the agreement, Vodafone AirTouch and Orange
continue to progress preparations for the demerger of Orange to
Vodafone AirTouch shareholders, as previously announced.
Enquiries:
Vodafone AirTouch Plc
Terry Barwick, Director of Corporate Affairs
Tim Brown, Investor Relations Director
Melissa Stimpson, Senior Investor Relations Manager
Tel: +44 (0) 1635 33 251
Tavistock
Lulu Bridges
Tel: +44 (0) 20 7600 2288
Goldman Sachs International
Simon Dingemans
Tel: +44 (0) 20 7774 1000
UBS Warburg
Warren Finegold
Mark Lewisohn
Tel: +44 (0) 20 7567 8000
This announcement has been issued by and is the sole
responsibility of Vodafone AirTouch Plc. Goldman Sachs
International and UBS AG, acting through its financial services
group UBS Warburg, which are regulated in the United Kingdom by
The Securities and Futures Authority Limited, are acting for
Vodafone AirTouch Plc and for no one else in connection with the
proposed transaction and will not be responsible to anyone other
than Vodafone AirTouch Plc for providing the protections afforded
to customers of Goldman Sachs International and UBS Warburg, or
for providing advice in relation to the transaction.
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