Investors ‘looking at O2 UK acquisition’, says report

Private equity companies are looking at buyout possibilities for O2 in the UK, following the European Commission’s rejection of a takeover bid by CK Hutchison’s Three UK.

According to a report in the Daily Telegraph, private equity Apax and CVC Capital Partners are working with Tom Alexander, who created Virgin Mobile as the first mobile virtual network operator (MVNO) in the late 1990s and went on to be the first CEO of EE when Orange and Deutsche Telekom merged their UK operations.

However talks cannot formally start until 15 July, says the report, because until then Telefónica, which owns O2 UK, has an exclusivity agreement with Hutchison – even though the merger cannot now take place.

Potential private equity sponsors have approached Ronan Dunne, CEO of O2 UK, says the Telegraph, in a story attributed to unnamed “sources”. The Telegraph adds: “O2’s chief executive is said by sources to be willing to consider buyout proposals with or without Mr Alexander’s involvement. In any management buyout scenario he would be likely to be well rewarded.”

Other candidates for acquiring O2 UK include Liberty Global, the US company that owns Virgin Media, which includes the old Virgin Mobile. Sky may be willing to invest, says the Telegraph.

The European Commission prohibited Hutchison’s proposed acquisition of O2 UK because it “would have led to a reduction in terms of choice and to higher prices and lower quality services for UK consumers than without the deal”. A merger would have reduced the choice of network providers for MVNOs, the Commission added.

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