Tom Alexander, the ex-CEO of Everything Everywhere Ltd, has enlisted the financial backing of private equity majors KKR & Co LP (NYSE:KKR) and Apax Partners Holdings Ltd for a daring GBP8bn (USD12.6bn/EUR9.9bn) move on the top UK mobile phone operator, the Sunday Times reported citing sources with knowledge of the matter.
Everything Everywhere emerged on the scene in 2010, bringing together in a joint venture T-Mobile and Orange, the UK units of Deutsche Telekom AG (ETR:DTE) and France Telecom SA (EPA:FTE). The mobile operator, which has 27m users, was led by Alexander until last year, when he resigned to have more time for his family.
After spending months in an attempt to line up financial backers for a potential takeover bid, Alexander has enlisted the help of KKR and Apax, which are reportedly willing to provide about GBP3bn, the Sunday Times said. However, bankers believe that the consortium may find it impossible to secure the rest of the money before the autumn given the current state of the debt market.
Should Alexander manage to pull off the deal, he would be responsible for one of the largest UK takeovers backed by private equity. The record belongs to the 2007 buy-out of Alliance Boots, which featured a GBP11bn price tag and also had KKR in the driving seat.
But besides potential funding difficulties, Alexander and his partners have an even greater obstacle to overcome, namely persuading Deutsche Telekom and France Telecom to sell Everything Everywhere at this point.
While the telecommunications giants do not plan on being long-term investors, sector valuations are too low at present to tempt them into an exit, especially since neither company is hard-pressed for cash, a leading banker was cited as saying by the newspaper.
According to sources in the City, Deutsche Telekom and France Telecom estimate their joint venture to be worth at least GBP10bn, the Sunday Times added.