£14bn O2 takeover bid “called off”

A proposed £14bn takeover bid for O2 has been called off at the last minute, according to press reports. It would have been the largest takeover of a British company for several years.

The German owners of T-Mobile, Deutsche Telekom, and the Dutch telecoms group KPN were apparently planning an offer directly to O2’s shareholders, but the two parties failed to agree on the details of the bid.

It seems that under the proposed deal, Deutsche Telekom would have taken the majority of O2’s operations, including its UK business. KPN would get O2 Germany in order to avoid any potential competition issues there for T-Mobile.

The Sunday Times quoted a source close to the deal as saying it could be revived – “the deal is dead for now but it may not be dead forever”.

There has also been talk about a consortium of private-equity firms bidding for O2, though a combination of T-Mobile and O2 would have been an impressive presence in 02’s markets. And T-Mobile does not currently have a position in Ireland, one of Europe’s hottest mobile markets.

The aborted bid would have valued O2 at about 160p a share, a modest premium on the trading price just before the news broke. But the consultancy Arete Research has recently suggested that O2 could be worth as much as 200p a share on the basis of its current and potential business. O2 was once the laggard of the mobile phone market, but since it broke free of BT three years ago it has rather confounded City expectations.

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