Orange, MasMovil $20 Billion Spain Merger Gets Conditional EU Approval -- Update

By Adria Calatayud

The European Union's antitrust authority conditionally approved Orange's proposed combination of its Spanish business with rival MasMovil, paving the way for a deal set to create a company valued at 18.6 billion euros ($20.05 billion) including debt.

The European Commission--the bloc's antitrust enforcer--said Tuesday that its approval is subject to compliance with commitments made by the parties after it said last year the deal could harm competition as originally planned. The revised transaction would no longer raise competition concerns, the commission said.

The move means the companies cleared the biggest hurdle for a deal that was seen by many analysts as a test of the EU's stance toward mergers and acquisitions that reduced the number of telecom companies operating within a national market.

In response, Orange and MasMovil said the decision was favorable and that they plan to close the deal by the end of the first quarter.

As part of remedies offered by the companies to address the EU's competition concerns, Orange and MasMovil agreed to sell telecommunications spectrum to Romania's Digi Communications and to grant an option for Digi to enter into a national wholesale agreement.

The EU's decision took into account the highly competitive nature of the Spanish telecom market with balanced remedies in favor of an already existing player, Orange and MasMovil said.

Orange and MasMovil agreed to combine their Spanish operations in July 2022, creating the largest telecom operator in the country by customer numbers. Before the deal, Orange and MasMovil were, respectively, the second and fourth largest providers of retail mobile and fixed internet services in Spain, according to the EU.

The combined entity would generate annual revenue of more than EUR7.4 billion and earnings before interest, taxes, depreciation and amortization after leases of more than EUR2.3 billion, the companies said.

The EU in April last year opened an in-depth probe into the deal and in June sent a so-called statement of objections--a formal step to inform companies of objections raised against them--, saying its preliminary view was that the proposed combination might reduce competition and lead to price increases.

"But the commitments offered by the parties will enable Digi, the largest and fastest-growing mobile virtual network operator in Spain, to replicate the strong competitive pressure exerted by MasMovil," said Margrethe Vestager, executive vice-president of the European Commission in charge of competition policy.

Write to Adria Calatayud at [e-mail]

(END) Dow Jones Newswires

02-20-24 1041ET