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O2 CEO hearing offers for leveraged buyout

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With Hutchinson’s takeover bid blocked by the European commission, O2’s chief executive Ronan Dunne is reportedly considering management buyout offers.

Dunne has been approached over the last few weeks by private equity sponsors with offers for what would amount to a £8.5bn leveraged buyout of O2. This would be the the largest since before the 2007 financial crisis.

Hutchinson, owned by Spanish telecommunications giant Telefonica, saw its takeover bid for O2 blocked by the European Commission last week. The takeover would have seen Hutchinson’s network, 3, merged with O2’s to create Britain’s biggest mobile operator.

O2’s worth in a potential buyout has been marked at £8.5bn by interested parties, nearly £2bn less than Hutchinson’s offer of £10.25bn, which was made with the expectation that a merged network would save Hutchinson millions in the future.

With the collapse of the Hutchinson deal, a leveraged buyout is one of many options open to O2. Telefonica has said in the past that it may list O2 on the stock exchange. It is understood that Telefonica is not involved in talks between Dunne and potential parties, due to an exclusivity agreement with Hutchinson that expires at the end of the month unless both sides agree to let the deal go before then.

Interested parties include Liberty Global, the owner of Virgin Media, as well as Sky.

Published on Monday 16 May by Philip Gallagher

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