Experimental feature

Listen to this article

Experimental feature

TDC, the Danish telecommunications group, agreed to be bought on Wednesday by Nordic Telephone Company, a private equity consortium, in a leveraged buy-out deal worth DKr76bn (€10.2bn), Europe’s largest.

Including debt, the deal is valued at $15.3bn (€13bn), which would make it the second biggest leveraged buy-out, trailing only the $31.3bn buy-out of RJR Nabisco in 1989. However, the pending $15bn bid for Hertz in the US could still outrank it.

Thorleif Krarup, TDC board chairman, said: “There’s an almost 100 per cent probability that this bid will succeed.” Kurt Björklund, of Permira Advisers, one of the five funds behind the bid, said there was “a very high degree of certainty” of success.

The other consortium members are Apax Partners, the Blackstone Group, Kohlberg Kravis Roberts and Providence Equity Partners.

Mr Björklund, who will replace Mr Krarup as chairman, said NTC had bought 10.08 per cent of TDC’s equity within a few hours of announcing its bid, which was accepted by the Danish carrier’s board on Wednesday.

TDC’s board said it would recommend the bid but it retained its freedom to consider an alternative offer, should one be made.

The former state-owned monopoly has been in play since the spring, pursued by two groups of private equity suitors.

TDC’s shares, which have gained 65 per cent in the past year, closed 4.5 per cent higher at DKr378.5 in Copenhagen, just short of the DKr382 offer price. The offer represents a 39.3 per cent premium on TDC’s average price since August 16, when interest in TDC became public.

The consortium also pleased the market by offering to buy back almost all TDC’s €4.1bn outstanding bonds at par.

JPMorgan, CSFB, Deutsche Bank, Barclays Capital and Royal Bank of Scotland will provide $10bn in senior debt and high-yield loans to fund the deal.

Analysts across the Nordic region welcomed the bid. Karri Rinta, an analyst with Nordea in Helsinki said: “We believe this bid of DKr382 per share is as good as it gets”.

Although a rival private equity consortium was also working on a bid, Mr Rinta said a counterbid was unlikely to emerge. “As we view this second equity group to be weaker in terms of size and existing holdings in telecoms, we expect them to withdraw from the race.”

Contrary to a widespread assumption that NTC would dismember and divest the bulk of TDC’s assets, the consortium said it intended to continue management’s current strategy.

NTC also confounded speculation by keeping top management intact - both Henning Dyremose, chief executive, and Hans Munk Nielsen, chief financial officer, would be retained, it said.

The formal offer document will be published on Friday or Monday, at the latest. NTC said this would carry full details of how the acquisition financing is to be structured. NTC expects the tender to be completed in January.

Enskilda Securities, JPMorgan and Deutsche Bank advised NTC. Goldman Sachs advised TDC.

Copyright The Financial Times Limited 2019. All rights reserved.

Comments have not been enabled for this article.

Follow the topics in this article