Private equity houses, Texas Pacific Group and AXA Private Equity, have agreed to buy a 60% stake worth circa €2bn in French infrastructure business Télédiffusion de France (TDF).
Effectively a secondary buyout, Texas Pacific is buying a 42% equity stake, while AXA will take an 18% holding in the broadcasting towers business, which relays TV, radio and telecom signals throughout France and Europe.
As part of the deal, which is still subject to regulatory approval, UK-based Charterhouse Capital Partners is slashing its current 55% stake in TDF to 14%. France’s state-backed pensions and investment fund, Caisse des Dépôts et Consignation, is also reducing its equity in TDF from 44% to 24%, while management and employees will share a 2% holding under the new shareholder structure, compared to the 1% they previously held.
Australia’s Macquarie Bank is thought to have lost out against Texas Pacific Group and AXA. Macquarie bought NTL’s UK towers business in 2004 for $2.4bn. Reports also claimed that Goldman Sachs’ private equity arm, as well as France’s PAI Partners, Eurazeo, and Spain’s Abertis, were all interested in buying TDF.
The deal will give TDF €1bn worth of funds for organic growth over the next five years, in addition to another €1bn for M&A activity both in France and abroad. TDF already has operations in Spain, Finland, Poland, Estonia, Monaco, with France accounting for 86% of its €954m revenue in 2005.
TDF realised that further investment is needed to cope with an increasingly wireless world of digital communications. It currently owns 7,500 towers across Europe with mobile clients including Orange, SFR and Bouygues.
Under the burden of a huge debt mountain, France Telecom sold TDF in 2002 for €2.5bn to the buyout consortium made up of Charterhouse, Caisse des Dépôts et Consignation and its CDC Entreprises Equity Capital, management and employees. At the time, political sensitivities in France ruled out any financial buyer gaining sole ownership of the business.