European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

Euskaltel - MasMóvil: Another Step in Spanish Telco Consolidation

Event-Driven

The bid of MásMóvil for Euskaltel makes strategic sense because it both reinforces the position of the enlarged group as the fourth largest national operator and the obtention of synergies through network sharing.
The offered price assumes 24.3x Fwd P/E (vs. 14.2x median of European comparables) and 9.7x EV/EBITDA (vs 6.9x for comps).
Several funds have acquired significant stakes in the capital of Euskaltel. Among them, Magnetar Capital stands out, with a joint stake, through several vehicles, of 7.96%, with a value over €155 mn. Syquant has acquired 3.9%, Citigroup, c. 1% and DWS Investment another 1%. Capital Group (3.3%) and NN Group (6.8%) have reduced their stakes.
The <a href="http://www.cnmv.es/Portal/verDoc.axd?t=%7bd587a5ae-55c8-44b2-bb09-aa1f48b90805%7d" target="_blank" rel="noopener">acceptance period</a> started on 7 July and will last until 30 July inclusive. The period for competing offers remains open until the fifth calendar day prior to the end of the acceptance period (i.e. 25 July).
Interloper risk seems almost non-existing, in my view, once Masmovil has achieved the irrevocable commitment of the main Euskaltel shareholders (52.32% irrevocable undertakings). Despite not being a takeout bid, the aim of Masmovil is to delist Euskaltel if it reaches over 90% acceptances.
The deal should close by mid-August. Gross spread is 0.4%. Recommendation is long and tender.

The bid of MásMóvil for Euskaltel makes strategic sense because it both reinforces the position of the enlarged group as the fourth largest national operator and the obtention of synergies through network sharing.
The offered price assumes 24.3x Fwd P/E (vs. 14.2x median of European comparables) and 9.7x EV/EBITDA (vs 6.9x for comps).
Several funds have acquired significant stakes in the capital of Euskaltel. Among them, Magnetar Capital stands out, with a joint stake, through several vehicles, of 7.96%, with a value over €155 mn. Syquant has acquired 3.9%, Citigroup, c. 1% and DWS Investment another 1%. Capital Group (3.3%) and NN Group (6.8%) have reduced their stakes.
The acceptance period started on 7 July and will last until 30 July inclusive. The period for competing offers remains open until the fifth calendar day prior to the end of the acceptance period (i.e. 25 July).
Interloper risk seems almost non-existing, in my view, once Masmovil has achieved the irrevocable commitment of the main Euskaltel shareholders (52.32% irrevocable undertakings). Despite not being a takeout bid, the aim of Masmovil is to delist Euskaltel if it reaches over 90% acceptances.
The deal should close by mid-August. Gross spread is 0.4%. Recommendation is long and tender.

Euskaltel SA

MásMóvil/Euskaltel: Deal Progress