Cellnex Buys CK Hutchison European Towers for $12 Billion

(Bloomberg) -- Cellnex Telecom SA has agreed to buy CK Hutchison Holdings Ltd.’s European telecommunication towers for around 10 billion euros ($11.8 billion), the biggest ever acquisition by the Spanish mast operator.

Cellnex will make an initial payment of about 8.6 billion euros in cash, with the rest paid with new shares, giving CK Hutchison a 5% stake in Cellnex, according to filings from the companies.

CK Hutchison is the latest mobile network operator to carve out mast infrastructure to cut debt and help pay for costly 5G network upgrades. The deal will add around 24,600 new towers to Cellnex’s existing 60,000 sites, with Cellnex committing to invest about 1.4 billion euros to deploy 5,250 more masts by 2030.

Several large European phone companies are at various stages of setting up their own tower companies to boost their value and draw in new investment. Unlike CK Hutchison, many plan to keep majority control of the infrastructure, which they see as strategically important.

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Cellnex has grown aggressively through acquisitions since its initial public offering five years ago, and the deal marks its entry into three new markets -- Austria, Denmark and Sweden. The company’s shares have soared as it drew investors with a steady stream of revenue from long-term contracts with phone companies.

This year alone, Cellnex has announced two acquisitions in Portugal, a deal to enter Poland and a deal in France.

The price agreed with CK Hutchison, including the investment commitment, represents a ratio of 11.75 times the unit’s enterprise value to earnings before interest, taxes, depreciation and amortization, in line with the valuations of other recent deals, according to Banco Sabadell analyst Andres Bolumburu.

Cellnex shares were down 0.15% at 53.98 euros per share as of 2:48 p.m. in Madrid. The shares are up 50% this year.

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