TDC accepts $6.7bn PE-led bid


Financier Worldwide Magazine

April 2018 Issue

In mid-February, Danish telecoms operator TDC announced it is to be acquired by a consortium of three local pension funds and Australian infrastructure investor Macquarie for around $6.7bn.

The consortium will pay DKr50.25 or $8.31 per share for the company, a premium of about a third to TDC’s share price the day before the group’s interest was first made public.

TDC had rejected an earlier, unsolicited approach from the consortium at the start of February, noting that the offer “is not in the best interest of TDC’s shareholders and stakeholders”. The initial approach would have seen TDC shareholders receive around DKr47 or $7.70 per share for a total deal value of $6.3bn. Upon rejecting the initial offer, Pernille Erenbjerg, TDC’s group CEO and president, reinforced the company’s desire to provide cutting edge services to the Danish population. “We work to help businesses grow without hinderances, and to ensure that Denmark is ready for a digital future featuring intelligent homes and smart cities linked together by a world class internet service,” she said. TDC’s rejection of the offer caused the company’s shares to surge 20 percent.

Despite the initial rejection, the consortium remained committed to pursuing a deal for TDC, and returned with an improved offer. However, that offer represents a significant decline in the value of TDC since it was sold for €13bn to five private equity firms in 2005 in one of Europe’s largest leveraged buyouts.

Under the terms of the new offer, Macquarie will own 50 percent of TDC and the three pension funds – ATP, PFA and PKA – will each hold an equal share, according to Mikkel Friis-Thomsen, a spokesman for PFA.

The consortium said it would make ‘material investments’ into network infrastructure and split the company in two with one unit focused on its telecommunications network and the other on customer service and content. The consortium plans to invest in Denmark’s telecoms infrastructure, providing 1Gb download speeds to every property in the country by the mid-2020s.

Allan Polack, chief executive of PFA, said: “This is a long-term investment in the development of essential Danish digital infrastructure, and the consortium sees a great potential in this. All sectors of business are undergoing a digital transformation that will only take on speed in the coming years, and digital infrastructure is key in supporting this development.”

“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 of TDC, Pierre Danon, said in the statement.

The sale of TDC comes at a crucial time. TDC was on the cusp of a $2.5bn merger with Modern Times Group’s (MTG) Nordic group. That deal had already won the approval of MTG’s largest shareholder Kinnevik and was expected to be completed during the second half of 2018; however, it has now been cancelled. “Modern Times Group (MTG) has been informed by TDC that its Board of Directors intends to withdraw its recommendation of the signed agreement with MTG to combine its Nordic Entertainment and MTG Studios businesses with TDC Group. The combination is subject to, inter alia, the approval by a TDC Group shareholders’ meeting. MTG will provide further information to the market as and when it is received,” MTG said in a statement.

“We still think the combination with TDC would have been valuable to shareholders,” said Jorgen Madsen Lindemann, chief executive of MTG. “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.”

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Richard Summerfield

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