Telefonica, owner of British carrier O2, and Hutchison Whampoa, the parent company of competitor Three, have confirmed they are in talks over a potential acquisition, following earlier reports. The two have entered “exclusive negotiations,” which could see O2 change hands for an estimated £10.25 billion ($15.4 billion) if discussions between the executive teams succeed.
According to press releases from both parent companies, the negotiations will apparently take “several weeks” and would require approvals from shareholders and regulators before completing. If agreed, the current offer would in fact take the form of two payments, with an initial £9.25 billion cash payment followed by a deferred £1 billion “after the cumulative cash flow of the combined businesses have reached an agreed threshold.”
Reports back in November suggested that O2 had another potential suitor before Hutchison Whampoa. BT was rumored to be lining up an acquisition, and though O2 was the initial target, it instead opted to go for rival network EE. Sky has also been linked to O2 this week, but more in a “strategic partnership” role which could lead to Sky selling O2 lines to customers as part of “quad play” services. It is unclear if Sky’s actions will affect the Hutchison Whampoa acquisition.
