In a deal that could become Europe’s largest-ever buyout, Denmark’s national telecoms operator TDC has agreed to recommend to its shareholders the US$12bn offer from private equity-backed Nordic Telephone Company.
However, TDC chairman Thorleif Krarup said that if another offer came in – considered only likely now from a trade buyer – then the TDC board would be “obliged to evaluate it seriously”.
Nordic Telephone was formed as an acquisition vehicle by Richard Wilson at Apax Partners, Lawrence Guffey and Walid Kamhawi at Blackstone Group, Oliver Haarmann at Kohlberg Kravis Roberts, Kurt Bjorklund at Permira Advisers and Jonathan Nelson and Gustavo Schwed at Providence Equity Partners. The firms are investing around €2.5bn of their own money and leverage will emerge around 6x.
Nordic Telephone has offered DKr382 cash per TDC share, which values the target’s equity at DKr76bn (US$12bn). Including TDC’s debt of about US$3bn, the deal is valued at around US$15bn. The offer price is a 39.3% premium relative to the average TDC share price on August 16.
The deal, if completed, would be Europe’s largest-ever buyout. Including debt, the acquisition of TDC will be larger than the US$12.8bn acquisition of Italian telecoms company Wind by Naguib Sawiris, a deal that escaped private equity sponsors.
The company’s US-listed ADS-shareholders will be offered DKr191 each in cash. And due to US law, a formal offer for TDC has been delayed until US regulators can clear the ADS part of the deal.
There is no break fee, however, in the agreed offer and a rival bid is still possible from a consortium of Cinven, BC Partners, Silver Lake and Apollo. TDC declined to comment on its expectations of a second bid, although analysts have reportedly said the Nordic Telephone offer is fair.
Nordic Telephone in a joint statement said: “TDC is an excellent company with strong market positions and a proven management team. We believe that this offer, which would make this the largest private equity transaction ever in the Nordic region, represents a compelling proposition.”
The company added that it would keep TDC’s strategy of being an integrated Nordic mobile, fixed line, cable and broadband delivery and continue the development of its Swiss operations.
JPMorgan and Enskilda Securities were lead financial advisers to Nordic Telephone, with additional advice from Deutsche Bank. Bech-Bruun provided local legal counsel with Simpson Thacher & Bartlett advising on US law.
The transaction will be financed by Barclays Capital, CSFB, Deutsche Bank, JPMorgan and Royal Bank of Scotland.