Vodafone may have to raise its takeover bid for Ono after the cable operator said it will press ahead with a stock market sale.
The British telecoms giant had approached the private equity owners of Spain's largest cable operator with a takeover offer earlier this week, in an attempt to pre-empt a €7bn (£5.8bn) initial public offering (IPO) and create the biggest rival to date for Spanish market leader and former monopoly Telefonica.
But Ono, which sells fixed and mobile phone, TV and internet services, said on Wednesday its board did not discuss any takeover proposal at a meeting at its headquarters in Madrid last night.
A statement read: “The board endorsed the pursuit by management of the steps required for a possible stock market listing of the company. No proposal to acquire Ono, or any related matter, was presented to or discussed by the board of directors.”
A potential competing bidder, US-based Liberty Global controlled by billionaire John Malone, has also expressed an interest in Ono, a person familiar with the situation has said.
"We believe that the acceleration of the IPO may tip the scales in terms of forcing the hand of possible bidders in making up their mind before the IPO, or risk having to pay higher multiples in the future for a takeover," said JB Capital Markets in a note to clients.
Analysts said the situation was reminiscent of the stock market sales of European cable operator peers Kabel Deutschland and Ziggo that were subsequently taken over by Vodafone and Liberty, respectively, at higher prices.
One source, who had been briefed on the Ono board's discussions, said the directors had agreed to first carry out a capital increase of €800m and later sell existing shares for a total amount of at least €200m.
Ono believes it has an enterprise value of around €7bn, including debt worth €3.4bn. Based on this price, about 25 per cent of the company would float on the stock exchange after the listing, the source said.