UK mobile phone operator O2 has agreed to a £17.7bn ($31.6bn) takeover by Spanish telecoms firm Telefonica.
O2 is Europe's sixth-largest mobile phone operator
BBC News looks at what the deal means for the future of O2, its customers and its shareholders.
Is Telefonica's takeover good for 02 customers?
O2 chief executive Peter Erskine, who is backing the Spanish takeover approach, seems to think so.
He says the combined company will be able to offer users improved roaming services around the world.
O2's operations in the UK, Germany and Ireland fit neatly with Telefonica's in Spain and much of Latin America.
But on a day-to-day level, O2 customers shouldn't notice too much difference. Telefonica has pledged to keep O2's brand name and management in the UK.
Was the takeover expected?
02 has been at the centre of takeover rumours for some time.
As one of Europe's few independent mobile phone operators, the company is regarded as something of a prize by telecom rivals.
Dutch firm KPN and Deutsche Telekom recently revealed they were in talks to buy O2, although no deal emerged.
Hong Kong-based Hutchison Whampoa, the owner of Britain's third-generation 3 network, has also been linked to a possible takeover.
But Telefonica's announcement still came as something of a surprise for investors, many of whom are still tipping a bid from Deutsche.
Is O2 in good shape?
Europe's sixth-largest mobile phone group has been in bullish mood recently.
Last month the company said it expected revenue growth in the UK to increase by up to 9% and also pointed to strong growth in Germany.
O2 was spun off from Britain's dominant fixed-line operator BT Group in 2001, and reported pretax profits of £309m last year.
Its takeover leaves a UK mobile phone market dominated by foreign operators, with Orange owned by France Telecom and T-Mobile owned by Deutsche Telekom.
Only mobile giant Vodafone remains British-owned.
What does the takeover bring to Telefonica?
A slice of two of Europe's most important telecoms markets - Britain and Germany.
O2's brand will remain the same under the Spanish deal
As one of the world's biggest phone companies, Telefonica has been busily expanding its operations in Latin America, but has been looking to build its presence in Europe.
The company says its planned acquisition of O2 will improve the profile and balance of its operations worldwide.
"O2 is an excellent company that, driven by a top-class management team, has been able to become one of the highest growth mobile operators in Europe," says chairman Cesar Alierta.
Telefonica, which has about 145 million customers across the world, estimates its takeover of O2 will generate savings in the region of £200m by 2008.
Is a counter-bid for O2 likely?
Analysts appear to think so.
"Do I think someone else will come to the table? Absolutely," says Deutsche Bank analyst Gareth Jenkins.
Telefonica's 200 pence per share cash offer for 02 represents a 22% premium on the UK company's Friday closing price of 164.25 pence.
The Spanish firm has the backing of 02's board.
But Mr Jenkins believes Deutsche Telekom could mount a rival offer of more than 200 pence per share with a cash-and-shares bid.
All this is good news for O2's shareholders, who stand to do well out of any battle for ownership of the British firm.
The story of O2's takeover may not be over yet.