Finland Reduces TeliaSonera Stake to 10.1% on Budget Squeeze

Finland is cutting its holdings in phone network operator TeliaSonera AB as the Nordic country suffers a fifth consecutive year of budget deficits.

Solidium Oy, the state’s equity-asset manager, sold 1.6 percent of shares in the Stockholm-based company in an accelerated book building to institutional investors, it said in a statement today. It raised 368 million euros ($485 million) in the sale of 68 million shares, for a gain before tax of 128 million euros, relative to book value.

The shares were priced at 47 Swedish kronor, the lower end of a price range of 47 kronor to 48 kronor, said one person with knowledge of the matter who asked not to be named as the details aren’t public. Petter Soederstroem, Solidium’s investment director, declined to disclose the price in kronor.

TeliaSonera shares fell as much as 3.2 percent to 46.95 kronor, the most in five months, at 9:50 a.m. in Stockholm. Volume traded was 118 percent of the three-month daily average.

“The majority of the funds we’re raising will be returned to the state,” Solidium Managing Director Kari Jaervinen said by phone. “We have had discussions on the target amount.”

Finland’s economy is recovering from a yearlong recession, its second in four years, the statistics office in Helsinki said today. The contractions have pushed companies to cut jobs, hurting the government’s tax revenue and increasing spending on benefits. Still, Finland has managed to keep its budget deficit within the European Union’s 3 percent limit of gross domestic product since at least 1996.

Capital Repayment

Solidium will decide the amount and form of the capital repayment to the state at an annual general meeting later this month, Jaervinen said. Last year it paid a dividend and returned capital to its owner totaling about 800 million euros.

Solidium reduced its stake to 10.1 percent from 11.7 percent in the sale managed by Deutsche Bank AG. Finland last sold TeliaSonera shares in March 2012, raising 1.05 billion euros to fund investments in the mining industry. The state moved its shareholdings to Solidium’s management in 2008 and the current value of its portfolio is 7.9 billion euros in equities.

TeliaSonera shares have climbed 10 percent this year through yesterday. Solidium’s stake was valued at 2.78 billion euros before the transaction and it’s the biggest investment in its portfolio. Solidium said it won’t dispose of more shares for 90 days following the transaction.

European companies have raised about $63 billion in additional share sales this year, including accelerated book-building transactions, compared with $30 billion in the same period last year, according to data compiled by Bloomberg.

The sale is Finland’s second-biggest telecommunications-related deal announced this year, according to data compiled by Bloomberg. Nokia Oyj this week sold its handsets unit to Microsoft Corp. and licensed patents in a transaction valued at

5.44 billion euros.

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