UK allows the O2-Virgin £31.4bn mergerEuropost
UK announced that the long awaited merger between the broadband company Virgin Media and Telefonica's British mobile network O2 has received a green light, Reuters reported. The deal will result in establishing of a new telecommunication giant with a combined value of 31.4 billion pounds. It took several months before the UK antitrust body gave a go ahead to the deal.
Virgin owner Liberty Global and Spain's Telefonica agreed the merger a year ago, creating a powerhouse in broadband and mobile to take on market leader BT.
The companies said the deal, which values O2 at 12.7 billion pounds and Virgin Media at 18.7 billion pounds to give the new group a combined value of 31.4 billion pounds including debt, is expected to close by 1 June.
The 50:50 joint venture, which will be led by Virgin Media boss Lutz Schüler, will have 11 billion pounds of annual revenue, the two owners said. Competition and Markets Authority had been concerned about the possible impact of the merger on the mobile market given that both companies sold wholesale services to other operators. However it gave the deal provisional approval last month after concluding that the presence of other players in the market offering rival services, such as BT and Vodafone, would maintain competition.