Zegona presses ahead with plan to buy Yoigo despite higher rival bid

Zegona said it would continue to pursue an acquisition of Spanish mobile operator Yoigo in spite of the uncertainty caused by the emergence of a rival bidder prepared to offer a higher price.

In a statement, the UK-based venture capital company said it had reached agreement with TeliaSonera within the original exclusivity period and had also achieved "100 per cent underwritten financing". However, it noted that discussions with Yoigo's minority shareholders had not led to a full agreement.

TeliaSonera -- which recently adopted the new name of Telia Company -- owns 76.56 per cent of Yoigo, while just over 20 per cent is owned by two Spanish construction and infrastructure businesses, ACS and FCC, and 3 per cent by property company Abengoa.

Zegona said it has been notified that there is another bidder interested in acquiring Yoigo. Although it did not disclose any names, Spanish media has previously speculated that Másmovil submitted a bid of €550 million ($623 million).

"It is our understanding that this new bidder is willing to offer a price higher than that which Zegona considers to be fair and reasonable given the status of the business, our disciplined approach to valuation and our focus on shareholder returns," Zegona said.

Since the higher offer is still subject to due diligence and the ability to secure financing, Zegona said it decided to press ahead with the transaction.

"It is our intention to progress this transaction as we continue to evaluate the many attractive opportunities for additional acquisitions across the broader European TMT landscape," the company said.

TeliaSonera confirmed in March that it was in exclusive talks with Zegona over a possible takeover of Yoigo. Reports have suggested that bids were expected to be in the range of €500 million to €600 million.

Másmovil has been seen as the more likely contender since a merger of the two companies would create a new fixed-mobile player on the market: the MVNO acquired some of Jazztel's assets when the fixed operator was bought by Orange Spain.

However, Zegona -- which was established by two former Virgin Media executives to execute a 'buy-fix-sell' strategy in the European technology, media and telecommunications (TMT) sector -- also now owns fixed assets in Spain after buying cable operator Telecable there last year.

In 2014 TeliaSonera noted that its Spanish business remained sub-scale with a market share of around 7 per cent. Yoigo has struggled to make headway on the market despite an aggressive, low-cost approach.

For more:
- see the Zegona statement (restricted access based on location)

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