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TEO Rises to 5-Year High on Profit, Buyout Effect: Vilnius Mover

TEO LT AB, Lithuania’s biggest communications company, rose to a five-year high on renewed investor demand after a financial report combined with the smaller supply of shares after a buyout bid by TeliaSonera AB.

The shares rose as much as 3.1 percent today in Vilnius, closing up 2.8 percent at 0.728 euros, the highest since July 31, 2007. The move helped push the OMX Vilnius stock index up 1.45 percent today to a 12-month high of 352.25.

TeliaSonera of Sweden increased its stake in TEO LT to 88.15 percent through a voluntary takeover bid in June at a price of 0.637 euros. Institutional investors, including East Capital Asset Management, agreed to sell at that price, given the poor outlook for telephone services. TEO shares have risen 10.1 percent since it reported on Oct. 15 that growth of Internet, data and TV sales more than offset declines in phone revenue in the third quarter.

“The company’s results are good and investors now expect a dividend for this year of no less than last year’s,” Andrius Suminas, a broker at Swedbank in Vilnius, said in e-mailed remarks. “Given the small free float after the buyout, investors seeking to buy the shares have to raise the price.”

Besides dividend expectations, some investors speculate that TeliaSonera, which also offered to buy all of TEO’s shares in 2009, may soon return with a third offer, Tadas Povilauskas, an analyst at investment bank Finasta said by phone in Vilnius.

Today’s volume of 178,806 shares was twice the three-month daily average, according to data compiled by Bloomberg.

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