Vodafone Bids To Revive £5.7bn Spanish Deal

Vodafone has resumed talks about buying Spain's biggest cable operator as it seeks to deploy some of the huge cash-pile generated by the $130bn sale of its stake in Verizon Wireless, its US partner.

Sky News understands that Vodafone has in recent days held fresh discussions with the private equity groups which control Ono about a takeover that could be worth approximately €7bn (£5.7bn).

The talks are at a tentative stage and Vodafone is understood to be pessimistic about its chances of persuading Ono's shareholders to ditch a planned flotation and agree a sale to the British-based mobile group instead.

Vodafone has a big presence in Spain, and has been bulking up its presence in some key markets by acquiring cable assets to broaden its product offering as mobile internet services become more pervasive.

Last year, it bought Kabel Deutschland (Other OTC: KBDHF - news) while rival Liberty Global (NasdaqGS: LBTYA - news) bought Virgin Media in the UK.

Vodafone's initial approach for Ono was rebuffed last month, but an insider said on Monday that it would remain disciplined about any revised offer.

"They won't overpay," he said.

One banker close to Ono said that any protracted market volatility caused by the crisis in Ukraine could play into Vodafone's hands by persuading Ono's shareholders of the merits of accepting the certainty of a firm takeover bid.

Ono is owned by a large group of investors, including the private equity firms Providence Equity Partners, Thomas H Lee Partners, CCMP Capital Advisors, and Quadrangle Capital.

Vodafone is itself a potential takeover target for the US telecoms giant AT&T (NYSE: T - news) , although it recently ruled out a bid until the summer.

The UK company has just handed over a £54.3bn ($84bn) windfall to its shareholders from the sale of its stake in Verizon Wireless to Verizon Communications (LSE: VZC.L - news) .

The majority of that sum was in the form of Verizon (NYSE: VZ - news) stock and the remaining $24bn (£14.5bn) in cash.

Vodafone declined to comment on its interest in Ono.

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