South Africa’s Vodacom Group Limited has agreed to buy 55% stake in Vodafone Egypt. The deal captures growth in a fast-growing information communications and technology market.
Vodacom operates in 7 countries including South Africa, Tanzania, the Democratic Republic of the Congo (the DRC), Mozambique, Lesotho and Kenya. With a mobile population of over 295.8 million people.
The transaction values Vodafone’s 55% shareholding in Vodafone Egypt at €2,722 million on a debt free, cash free basis, implying a multiple for the last twelve month period ended 30 September 2021 of 7.3x Adjusted EBITDAaL and 12.2x Adjusted OpFCF2.
Based on Vodafone’s 55% share of the net debt in Vodafone Egypt as at 30 September 2021 the total equity consideration is €2,365 million (the “Purchase Consideration”). Approximately 80% of the Purchase Consideration (€1,892 million) will be settled by the issue of 242 million new ordinary Vodacom shares to Vodafone at an issue price of ZAR 135.75 per share. As a result, Vodafone’s ownership in Vodacom will increase from 60.5% to 65.1%.
The remaining 20% of the Purchase Consideration (€473 million) will be settled in cash3.
Under the terms of the sale and purchase agreement, the cash element of the Purchase Consideration will be adjusted for any movement in the net debt and agreed working capital of Vodafone Egypt between signing and closing. As such, Vodafone will be entitled to its 55% share of the cash generated by Vodafone Egypt between signing and closing.
The Johannesburg Stock Exchange (“JSE”) has taken note that Vodacom’s JSE defined free float will be below 20% as a result of Vodafone’s increased ownership. Given the scale of Vodacom’s current liquidity on the JSE, the JSE has not asked for any remedial steps to be taken. Vodafone confirms that is has no current intention to dispose of any of its shares in the market to increase Vodacom’s free float.