Spanish cable company Ono said on Friday it agreed to buy Auna's fixed line and cable business for about 2.25 billion euros ($2.72 billion) to expand the market it serves and challenge its main rival Telefonica. The deal caps the divestment of Auna, Spain's second-largest telecoms group, by its main shareholders, who earlier in the week reached a deal to sell a majority stake in the group's mobile telphone unit Amena to France Telecom.
Ono said the fixed line and cable deal would be financed in part by a 1 billion euro capital increase by the private equity firms Providence Equity Partners, Thomas H. Lee Partners, Quadrangle Capital Partners and J.P. Morgan Partners.
The rest of the financing will be provided by a series of senior and subordinated debt, which will refinance the enlarged Ono, the cable company said.
The deal gives Ono a national presence in Spain, providing it access to customers in Madrid and Barcelona and presenting a stronger threat to dominant fixed-line carrier Telefonica.
Ono said its telephone, television and Internet customers would benefit from the combination.
"Service will improve and prices will be more competitive thanks to the merger of the two cable companies," Ono President Eugenio Galdon said in a statement.
Ono did not provide details about when the deal would close, but said it requires regulatory approval.
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