30 September 2024
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Update on
the merger of Vodafone UK and Three UK
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On 14 June 2023, Vodafone Group Plc
("Vodafone") announced that it and CK Hutchison Group Telecom
Holdings Limited ("CKHGT"), a wholly owned subsidiary of CK
Hutchison Holdings Limited ("CK Hutchison"), had entered into
binding agreements in relation to a combination of their UK
telecommunication businesses, respectively Vodafone UK and Three UK
(the "Transaction"). Following completion of the Transaction,
Vodafone will own 51% of the combined business ("MergeCo") and
CKHGT will indirectly own 49%. A link to the original announcement
can be found below.
Following the entry into force of
the new UK Listing Rules (the "UKLRs") on 29 July 2024, Vodafone
confirms that the Transaction is classified as a significant
transaction and Vodafone shareholder approval will no longer be
required.
Certain additional information
relating to the Transaction is set out below as required under the
UKLRs.
A further announcement will follow
ahead of completion containing other financial and non-financial
information relating to the Transaction in accordance with the
UKLRs.
Board confirmation
The Board of Vodafone confirms that,
in its opinion, the Transaction is in the best interests of its
security holders as a whole.
Effect on Vodafone's earnings, assets and
liabilities
MergeCo will be consolidated in
Vodafone's financial statements and Vodafone has agreed to provide
the initial debt financing. The Transaction is expected to have a
broadly neutral impact on Vodafone's Net debt to Adjusted EBITDAaL
and is expected to be accretive to Adjusted free cash flow from the
fourth full year onwards.
The Transaction is expected to be
accretive to Group Adjusted EBITDAaL with an increase in total
assets and total liabilities.
Risks associated with the Transaction
The expected benefits of the
Transaction for Vodafone are set out in the 14 June 2023
announcement.
Vodafone additionally notes the
following potential risks associated with the
Transaction.
· The
Transaction may not proceed to completion if regulatory or CK
Hutchison shareholder approvals are not granted. If the Transaction
does not proceed to completion, Vodafone will not realise the
expected benefits from the Transaction.
· Vodafone may incur liability under the Transaction
documentation, which contains customary warranties and indemnities
as well as ongoing obligations on Vodafone to provide services to
MergeCo and ongoing shareholders arrangements in relation to
MergeCo.
Announcement of merger of Vodafone UK &
Three UK to create one of Europe's leading 5G
networks
Investors.vodafone.com/merger-of-vodafone-uk-and-three-uk
About Vodafone
Vodafone is a leading European and
African telecoms company. We provide mobile and fixed services to
over 330 million customers in 15 countries (excludes Italy which is
held as a discontinued operation under Vodafone Group), partner
with mobile networks in 45 more and have one of the world's largest
IoT platforms. In Africa, our financial technology businesses serve
almost 79 million customers across seven countries - managing more
transactions than any other provider.
Our purpose is to connect for a
better future by using technology to improve lives, businesses and
help progress inclusive sustainable societies. We are committed to
reducing our environmental impact to reach net zero emissions by
2040.
For more information, please
visit www.vodafone.com follow us on X at @VodafoneGroup or connect with us on
LinkedIn at
www.linkedin.com/company/vodafone.
About Three UK
Three UK Is CKHGT's UK
telecommunications business. As of 30 June 2024, Three UK had gross
assets of £8.6 billion (as derived from CK Hutchinson's most recent
published balance sheet). For the 12 month period ended 31 December
2023, Three UK made a loss before tax of £439 million (as derived
from CK Hutchinson's most recently published full year income
statement).
About CK Hutchison Holdings Limited
Listed on The Stock Exchange of Hong
Kong Limited, CK Hutchison Holdings Limited (CK Hutchison)
and its subsidiaries are principally engaged
in four core businesses: ports and related services, retail,
infrastructure and telecommunications. The
diverse businesses of the CK Hutchison Group and associated
companies operate in over 50 countries/markets across the
world.
For more information, please
visit www.ckh.com.hk
Risk Factors
The risks noted in this announcement
do not seek to cover all of the potential risks relating to the
Transaction or broader risks which generally affect Vodafone.
Further information on the material risks which generally affect
Vodafone are set out in Vodafone's 2024 Annual Report.
They do not set out an exhaustive
list or explanation of all the risks that may affect Vodafone or
its shares. Additional risks and uncertainties relating to
Vodafone, the Vodafone group and MergeCo that are not currently
known to the Board, or that the Board currently deems immaterial,
may, individually or cumulatively, also have a material adverse
effect on the business, financial results or financial condition
and prospects of Vodafone.
Forward-looking statements
The information in this announcement
(the "Information") may constitute or include forward-looking
statements. Forward-looking statements include, without limitation,
statements that typically contain words such as "anticipate",
"target", "expect", "estimate", "intend", "plan", "believe",
"hope", "aims", "continue", "will", "may", "should", "would",
"could", or other words of similar meaning. By their nature,
forward-looking statements involve risks and uncertainties because
they relate to events and depend on circumstances that may or may
not occur in the future. Vodafone cautions you that forward-looking
statements are not guarantees of the occurrence of such future
events or of future performance and that in particular the actual
results of operations, financial condition and liquidity, the
development of the industry in which Vodafone, the Vodafone Group,
MergeCo and other persons involved in the Transaction operate and
the outcome or impact of the transaction and related matters on
Vodafone, the Vodafone Group and/or MergeCo or other persons may
differ materially from those made in or suggested by the
forward-looking statements contained in the Information. These
expectations or any forward-looking statements could prove to be
incorrect, and outcomes usually cannot be influenced by Vodafone,
the Vodafone Group and/or MergeCo. It should be kept in mind that
actual events or consequences may differ materially from
expectations.
Vodafone expressly disclaims any
obligation or undertaking to release any updates or revisions to
any forward-looking statements to reflect any change in Vodafone's
expectations with regard thereto or any changes in events,
conditions or circumstances on which any forward-looking statements
are based. No representation or warranty is made that any of these
forward-looking statements will come to pass or that any particular result will be achieved. Undue
influence should not be given to, and no reliance should be placed
on, any forward-looking statement. The Information is given at the
date of this announcement and, except as requested by the FCA or
required by the UKLRs or any other applicable law, will not be
updated.
Unless expressly stated otherwise,
no statement in the Information is intended to be nor may be
construed as a profit forecast or valuation.
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Notes
1.
As referenced in this announcement, Adjusted
EBITDAaL is defined as operating profit after depreciation on
lease-related right of use assets and interest on lease liabilities
but excluding depreciation, amortisation and gains/losses on
disposal of owned assets and excluding share of results of equity
accounted associates and joint ventures, impairment
losses/reversals, restructuring costs arising from discrete
restructuring plans, other income and expense and significant items
that are not considered by management to be reflective of the
underlying performance of the Group.
2.
As referenced in this announcement, Net Debt is
defined as Gross debt less cash and cash equivalents, short-term
investments, derivative financial instruments excluding
mark-to-market adjustments and net collateral assets.
3.
Vodafone's assessment of the effect of the
Transaction on earnings, assets and liabilities is subject to the
outcome of both an accounting policy alignment and a purchase price
allocation arising on the consolidation Three UK.