markets

TDC Agrees to $6.7 Billion Takeover Bid From Pension Funds

Updated on
  • Danish phone carrier accepts offer after funds sweeten terms
  • Deal means TDC is set to scrap combination with Sweden’s MTG

Denmark’s TDC A/S agreed to be bought for about 40.8 billion kroner ($6.7 billion) by a group led by Danish pension funds, ending a week of wrangling over the future of the Nordic phone carrier.

Shareholders will get 50.25 kroner a share in cash, TDC said Monday in a statement. The offer, from pension funds ATP, PFA, PKA and Macquarie Infrastructure and Real Assets, represents a “high degree” of certainty and values TDC at 26 percent more than the closing price on Jan. 31, the day before TDC announced a now-defunct deal with Sweden’s Modern Times Group AB.

TDC had faced investor pressure to engage in talks with potential buyers after last week disclosing that it had rebuffed an expression of interest from the funds. The phone company managed to squeeze better terms from the buyers, which are set to gain control of a former monopoly that has strategically valuable assets in the wealthy Nordic country.

Pierre Danon

Source: TDC A/S

As part of the deal, TDC will abandon its agreement to buy MTG’s Nordic entertainment assets for 19.55 billion kroner ($2.4 billion), which some investors saw as a defensive measure by TDC to fend off the funds.

“After careful review of our options, the board of directors of TDC believes that the consortium’s offer represents both the most compelling value and the highest transaction certainty benefiting the TDC shareholders,” Chairman Pierre Danon said in the statement.

Shares of TDC rose 13 percent to 49.47 kroner in Copenhagen. The company said the funds’ offer isn’t conditional on due diligence.

If the deal is completed, Macquarie will own 50 percent of TDC and the other three funds an equal share each, said Mikkel Friis-Thomsen, a spokesman for PFA.

TDC is one of the few remaining European carriers small enough to be easily absorbed by a larger rival and has long been the center of buyout speculation and interest. Apollo Global Management LLC has circled in the past and Swedish carrier Telia AB has also been seen as a likely bidder, even though the Swedish company’s existing assets in Denmark could create antitrust hurdles. TDC, privatized in the 1990s and sold in an initial private offering by the Danish state, has previously been owned by private-equity funds.

Telia said earlier Monday it has investigated various strategic alternatives in Denmark, including a possible acquisition of TDC.

A former government monopoly, TDC is in a unique position because it has access to virtually all consumers in Denmark through its services and infrastructure, said Morten Imsgard, an analyst at Sydbank. That makes it a strategically attractive asset, even though its business has been under pressure in recent years, he said.

TDC has struggled with tough price competition in the Danish phone market, which has crimped profits and caused TDC to sacrifice higher dividend payments to protect its credit rating.

"We still think the combination with TDC would have been valuable to shareholders,” MTG Chief Executive Officer Jorgen Madsen Lindemann said in a phone interview. “While our tie-up with TDC was about convergence and bringing content to as many platforms as possible, it seems that the funds are interested in pursuing a different strategy.”

MTG will continue with its existing strategy and could find other infrastructure partners in the future, Lindemann said. Telenor ASA and Telia have both previously shown interest in owning content, he said. Shares of the Swedish company added 1.5 percent to 363.80 kronor.

LionTree Advisors and Morgan Stanley are the financial advisers for TDC, with Kromann Reumert providing legal help. Nordea Bank AB and Barclays Bank Plc are advising the buyers, with Plesner Advokatpartnerselskab, Baker McKenzie and Clifford Chance giving legal assistance.

— With assistance by Thomas Seal, and Kim McLaughlin

(Updates with MTG CEO comment in third-last paragraph.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE