Spanish telecoms firm Telefonica has announced it will sell British telecoms giant O2 UK to Hong Kong group Hutchison Whampoa in a deal set to create one of Britain's biggest mobile phone firms.
The Spanish telecoms giant Telefonica said in a statement released Tuesday that Hutchison Whampoa would make an initial payment of 9.250 billion pounds (12.5 billion euros, $13.7 billion) to acquire its British O2 telecoms unit. A further 1.0 billion pounds would be paid later once O2 reaches an agreed cash flow level.
"A definitive agreement has been reached after the finalization of the process of due diligence on O2 UK," Telefonica said, adding the deal was equivalent to 14 billion euros ($15.2 billion).
The deal is due to be wrapped up by June 30, 2016, a deadline that may be pushed back to September 30, 2016 under certain circumstances, Telefonica said.
UK telecoms shake-up
Hutchison Whampoa is owned by Hong Kong investment tycoon Li Ka-shing, who is ranked as Asia's richest man. Li is worth $30.6 billion, according to Bloomberg's Billionaires Index. In January, he announced a sweeping re-arrangement of his business empire.
Li already owns Britain's Three mobile phone network and reportedly intends to merge O2 into it, as he did when Three Ireland absorbed O2's Irish unit after Hutchison Whampoa purchased it in 2013.
The sale does not include Telefonica's O2-branded operations in Germany or its former Czech and Slovak subsidiaries, which also use the O2 brand.
Hutchison said in January that the deal would make it the owner of the largest mobile operator in Britain by market share. It was also the latest in a series of shake-ups in Britain's telecom sector.
British telecoms and TV firm BT had said in November that it was in preliminary talks to buy back O2, which was its former domestic mobile phone division. However, BT instead bought another British mobile phone operator, EE, for 12.5 billion pounds.
Another takeover saw British telecom giant Vodafone acquiring Spanish cable firm Ono in July 24 for 7.2 billion euros.
uhe/sgb (Reuters, AFP, dpa)