Liberty Global and Vodafone on Monday announced a 50-50 joint venture to create a “national unified communications provider in the Netherlands.”
According to a Vodafone press release, the venture will offer customers complementary offerings across video, broadband, mobile and B2B services.
Under the terms of the deal, Liberty Global’s fiber broadband brand Ziggo will combine with Vodafone’s mobile operations to “create a stronger fixed and mobile competitor in the Dutch market.”
Vodafone said the new integrated service provider will have over 15 million revenue generating units, including 4.2 million video, 3.2 million high-speed broadband, 2.6 million fixed-line telephony and 5.3 million mobile units.
For the full year 2015, the two brands brought in a combined revenue of around $4.9 billion (4.4 billion euros).
According to the agreement, Vodafone will make a cash payment of approximately $1.1 billion (1 billion euros) to Liberty Global to equalize ownership of the joint venture.
Neither Vodafone nor Liberty Global will consolidate the venture, according to the release. Instead, Liberty Global’s 50 percent interest will be attributed to the Liberty Global Group.
Vodafone said Monday the venture is expected to generate run rate and CapEx synergies of nearly $312 million (280 million euros) on an annual basis by the fifth year after closing. Revenue synergies of nearly $1.1 billion (1 billion euros) are expected to come from the new product offerings.
Nearly $390 million (350 million euros) in integration costs are expected to be incurred in the three years following the transaction’s closing.
Total expected synergies are expected to be around $3.9 billion (3.5 billion euros) after integration costs, Vodafone said.
The new venture will be overseen by three members each from Vodafone and Libery Global, as well as two members nominated by the Works Council, Vodafone said. The board’s chairman will be appointed for alternating 12-month periods, and the post will be held by a Liberty Global or Vodafone appointed director. Further management positions will be announced before the transaction’s closing, the company said.
Subject to closing conditions and approvals, the merger is expected to be completed near the end of this year, Vodafone said. The transaction, however, is not subject to Vodafone or Liberty Global shareholder approvals.
The announcement comes on the heels of news earlier this month that the pair were in talks to merge their Netherlands assets.
The companies had previously failed to come to an agreement to exchange assets in mid-2015, but ended those discussions when they couldn’t come to an agreement on the value of those assets.
