Vodafone Group said to be negotiating over the acquisition of ONO before planned IPO

Two people with information of the matter, said that Vodafone Group Plc is currently negotiating with Grupo Corporative ONO SA. The mobile telecommunications company is said to be seeking to acquire the Spanish cable operator, as it is preparing for an initial public offering.

One of the people with knowledge of the process, who asked not to be identified, because the talks are not public yet, revealed that the negotiations are taking place with ONOs owners. The person said that a deal between the two companies may be announced in the next few weeks. Of course, they also said that there is no guarantee that Vodafone Group and ONO will reach an agreement, which means that the owners of the Spanish company may choose to proceed with the initial public offering instead.

A potential acquisition of ONO would become part of the Vodafones expansion into a vast range of services, such as high-speed Internet and television across Europe. The company is aiming at improving its network and making new acquisitions. As Bloomberg reported, in 2013 Vodafone Group agreed to sell its stake in U.S. career Verizon Wireless to its partner Verizon Communications Inc.

When completed, the deal is expected to result in a 130-billion-dollar profit. This deal is also said to may turn out to be disruptive to the initial public offering scheduled at ONO. Two people familiar of the matter said that ONO has hold its negotiations with investment banks over selling shares in December 2013. The company could be valued at about 6.4 billion Euro (8.7 billion dollars) in an initial public offering, including debt, which is 8.5 times its 2012 earnings before interest, taxes, depreciation and amortization.

At an industry conference in September 2013 Ms. Rosalia Portela, who is the Chief Executive Officer of ONO, said that an initial public offering was “a priority, our goal, and we expect to be able to carry it out in the future.” The Spain spokesman of Vodafone – Pepe Romero refused to make any comments on the companys interest in ONO. An ONO spokesman also declined to comment.

According to CNN Money, the current share price of Vodafone Group Plc is 2.69% down, and its one-year return rate is 3.23% down. The 22 analysts offering 12-month price forecasts for Vodafone Group Plc have a median target of 37.96, with a high estimate of 45.33 and a low estimate of 21.16. The median estimate represents a -0.20% decrease from the last price of 38.04.