Telefonica acquires O2 for £17.7 Billion cash

Spanish telecoms giant Telefonica has announced that they are taking over the Mobile phone operator O2. The deal is worth around a massive £17.7 Billion in cash. This would help Telefonica to take its share value over that of its former parent BT. O2 chief executive Peter Erskine would now be joining the Telefonica board with O2 chairman Sir David Arculus.

Erskine said about the deal: “This is a good deal for shareholders, for staff and a very good deal for customers.” He personally owns around 2m shares of the company. Telefonica is expected to keep the O2 brand as such and Erskine would be continuing to work for the company, which operates in UK, Ireland, and Germany.

O2 has also said that the merger should not result in any job cuts at the company. And the deal would help Telefonica save around £200m by 2008, mainly on handset and equipment buying. Deutsche Telekom was another company hoping to bid for O2 and they have released no comments on this deal, which has been snatched away by Telefonica.