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TPG, Vodafone Merger No New Debt, Script Deal Tipped

One of the big talking points among phone brands at IFA 2018 in Berlin is the potential merger of TPG and Vodafone in Australia, with speculation that the deal will be all script and no cash due in part to the fact that both Companies are carrying billions in debt.

Vodafone has $8.4 billion in debt payable to UK Company Vodafone Group and Hong Kong’s CK Hutchison, part of the Cheung Kong group of companies.

Merged the two Companies could become a major player in the Australian market due to the “lean” operating skills of TPG.

According to the AFR the merger will be done via a scrip-based deal at a nil premium. ”

TPG would buy Vodafone Australia in exchange for new shares in the merged entity. The proposed deal would be done without TPG raising fresh equity or selling assets and the new Company will continue to be listed on the ASX.

According to analysts at JP Morgan, TPG is worth $8.6 billion and Vodafone is worth $7.4 billion with the merged Companies worth approximately $18 Billion.

The two companies’ respective shareholders would be expected to split the new company 50/50 with the two biggest shareholders being Vodafone Group and CK Hutchison, followed by TPG’s biggest shareholder David Teoh, the company founder, and his long-time backer, the Millner family’s Soul Patts.

The AFR Claims that the combined group would likely have $6.2 billion revenue and $2.11 billion EBITDA in the 2019 financial year, according to JPMorgan analysts who took a close look at the situation on Tuesday, increasing to $6.4 billion and $2.12 billion in 2020.

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