France Telecom Set To Acquire Orange

May 30, 2000

After protracted negotiations, France Telecom (FT) and Vodafone AirTouch have agreed to terms for the French telecommunications giant to acquire Orange Plc., the U.K.’s third largest mobile phone provider.

Vodafone, which is in the process of acquiring Germany’s Mannesmann AG, Orange’s present owner, was told by EU regulatory authorities that approval wouldn’t be given, unless Orange were sold to a third party.

FT, which has been actively seeking to expand its mobile phone business outside of France, plans to incorporate the Orange network in its other mobile businesses to create a Europe wide cell phone provider. It hopes to have 30 million customers by the end of the year, which would be the world’s third largest.

Under the terms of the agreement FT will pay an estimated £25.1 billion ($37.5 billion) in cash and shares of stock. It will also assume £1.8 billion ($2.7 billion) in debt, and loan an estimated £4.1 billion ($6.12 billion) to Orange to acquire new telecommunications licenses. The shares to be acquired by Vodafone will give it a stake in FT of just under 10 percent.

FT announced future plans to expand its cell phone business internationally, especially in North America, over the next few years.

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