BT has agreed definitive terms to acquire EE for £12.5 billion (€16.7 billion). The transaction will be paid as a combination of cash and new BT ordinary shares issued to both Deutsche Telekom and Orange.
EE is the leading mobile network operator in the UK with 31 million customers of which 24.5 million are direct mobile customersand 834,000 are fixed broadband customers. It has the largest 4G customer base of any operator in Europe.
The cash consideration will be financed by a combination of new debt financing and approximately £1 billion from the placing of new BT shares. The Equity Placing will be launched in due course. Following the transaction and equity placing, Deutsche Telekom will hold a 12% stake in BT and will be entitled to appoint one non-executive member of the BT Board of Directors. Orange will hold a 4% stake in BT.
BT expects to achieve combined operating cost and capex synergies of around £360 million (€480 million) per annum in the fourth full year post Completion. This is equivalent to a net present value of around £3.5 billion (€4.7 billion) before integration costs or around £3 billion (€4 billion) after integration costs.
“This is a major milestone for BT as it will allow us to accelerate our mobility plans and increase our investment in them. The UK’s leading 4G network will now dovetail with the UK’s biggest fibre network, helping to create the leading converged communications provider in the UK. Consumers and businesses will benefit from new products and services as well as from increased investment and innovation. The deal provides an attractive opportunity for BT to generate considerable value for shareholders, with significant operating and capital investment efficiencies supported by our tried and tested cost transformation activities. The enlarged BT will offer significant opportunities for employees as we lead the creation of a world-class digital infrastructure for Britain,” said BT Chief Executive Gavin Patterson.