British Aerospace plc, one of Europe’s largest defense contractors, sold a 16.11-percent stake in U.K. personal communications network operator Orange plc to SBC Warburg Dillon Reed for about $1.3 billion, announced the company.
British Aerospace, which originally acquired the Orange stake for about $92.1 million, retained a 5-percent interest in the wireless carrier.
Orange’s stock fell 4 percent after the sale, and continued to fall in the following days amid rumors that SBC Warburg, a division of Swiss Bank Corp., was left with as many as 50 million of the 193 million shares. Orange’s stock rebounded late last week, possibly on news that the company’s subscriber base grew by 117,000 during the first quarter for a total of more than 1.3 million customers.
Vodafone plc’s stock reportedly was up nearly 4 percent following the sale in a reaction to the high valuation of the Orange stock.
British Aerospace had been expected to sell its stake in Orange since it and co-shareholder Hutchison Whampoa Ltd. last year were given authority to reduce their combined stakes to 50 percent under Orange’s new bank facility agreements, according to Reuters. Orange was founded by British Aerospace and Hong Kong conglomerate Hutchison Whampoa in 1994.
The sale aroused speculation that the shares might be sold to a trade buyer such as German groups Viag AG or Mannesmann AG, said Reuters.
Cash proceeds from the sale will be retained for general corporate development, said British Aerospace.
“Today’s announcement is good news for Orange because it considerably increases the liquidity in our stock, expanding the free-float by over 50 percent and giving rise to a much broader shareholder base,” said Graham Howe, finance director of Orange.
“Whilst a non-core element of the company’s portfolio, British Aerospace is pleased to have been associated with both Hutchison Whampoa and Orange in this success story,” said Richard Lapthorne, finance director at British Aerospace, which builds fighter aircraft, motion sensors, missiles and navigation systems. “The Orange management team have demonstrated an excellent track record of achievement and we look forward to our continued association with both Hutchison Whampoa and Orange through our retained investment, which we regard as long term.”
Hutchison Whampoa has not indicated that it plans to sell its 49-percent holding in Orange.
