Yesterday the global mobile giant said that it had agreed to buy Irish telco Perlico in a deal that values the six-year-old firm at an astonishing €80m. An upfront cash-payment of €32m will be made, with the remaining earn-out dependent on future performance.
And already it looks as if Vodafone may have overpaid.
Even assuming that the acquisition price of Perlico remained €32m with no earn-out, Vodafone has paid €512 for each of the Irish firm’s 62,500 subscribers. Last year, Perlico rejected a takeover approach from Telefonica-owned O2. Maybe O2 saw the real value of the company.
Last month, Vodafone paid stg£537m (€773m at the time), for Tele2 in
What’s more, Vodafone is buying an operator that has done nothing yet but haemorrhage cash.
Latest
And if Perlico, by a feat of corporate magic, had somehow managed to move to a €1m operating profit position last year, Vodafone has still forked out at least 40-times earnings for the business. That looks like an extremely good deal for Perlico, but a leap of faith for Vodafone.
Vodafone has said that it will now be able to offer Perlico’s 62,000 (although it was reported to be 75,000 just six months ago) fixed-line and broadband customers additional services. Say, credit cards?
In May, Perlico said that it was planning a major push into the personal financial services market, intending to offer customers loans and credit cards. Mortgages, income protection and life protection products were also on the agenda, and the carrier was already in advanced negotiations with two Irish financial institutions.
“We don’t intend to be just a broker,” said Perlico founder Iain MacDonald back in May. “We want to develop products with providers and see this as a very good opportunity to deliver better value to consumers.” He even hinted that Perlico would consider buying a financial services outfit.
So are these projects on ice now Vodafone has come on board? Possibly, although Vodafone has said that Perlico will retain its own brand which may give it licence to continue its diversification.
While Perlico had originally slated last September as a “soft launch” date for its suite of finance products, it doesn’t appear to have happened just yet. It’s likely that those pesky takeover negotiations with Vodafone got in the way.
Just how interested will Vodafone be in pursuing these strategies? Difficult to call. They might be perceived as being a distraction from the core business. But if Perlico proceeds with its plans, and they’re successful, could Vodafone consider replicating such an approach in other markets? No, would seem the obvious answer, but maybe Arun Sarin’s mind is swirling with the possibilities.
In the meantime, the winners out of this are Perlico’s shareholders.
A €20m fundraising last year valued the company at just €55m, so Vodafone is already paying a potential 45% premium on that. Paper magnate Michael Smurfit paid €10m to acquire his 18% stake in Perlico. He could conceivably make a generous return on his investment.
Other Perlico investors include Iain MacDonald’s father Malcolm, a former corporate financier at ICC and Bank of Scotland, as well as David Martin, the former finance director of food and agri group IAWS. Serial technology entrepreneur Jim Mountjoy is also quids in.
Will the only loser be Vodafone?
http://www.rte.ie/business/2007/1113/perlico.html
http://www.siliconrepublic.com/news/news.nv?storyid=single9621
http://www.theregister.co.uk/2007/07/31/o2_results/
http://www.theregister.co.uk/2007/10/09/vodafone_tele2/
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2000/12/22/cnvoda22.xml
![[Valid Atom 1.0]](valid-atom.png "Validate my Atom 1.0 feed")
No comments:
Post a Comment