Denmark's TDC deal rattles markets

Jan 09, 2006

Europe's telecommunications market may become increasingly cut-throat, but competition means that smaller carriers too can hold out and not take up any investment offer that comes their way. Or at least that appears to be the strategy of one major shareholder in Denmark's TDC.

Despite weeks of preparation by a consortium of investors who were lining up to buy out the company, Danish pension fund ATP rejected the consortium's offer to acquire the domestic telecommunications group.

"In the opinion of ATP, the tender offer of DKK 382 (about $62) per share is off-hand attractive based on an assessment of TDC in its current form compared with other listed telecoms companies. Against that background, it was natural that the board of directors recommended that the shareholders accept the tender offer," ATP stated Monday.

Moreover, the pension group that holds just over 5 percent of total shares in TDC said that "it will be possible to generate an attractive long-term return by continuing and accelerating the initiatives already started up by the TDC management. This would include, among other things, increased focus on and continuing efficiency improvements of the company's core activities, divestment of non-core activities and optimisation of the company's capital structure."

ATP said that it recognized fully that by rejecting the offer by Nordic Telephone Company which was set up in November specifically to buy out TDC, it could lead to a fall in share price and anxiety in the near term. At the same time, the pension group said that "ATP's focus is on long-term value creation."

Represented by the Nordic Telephone Company are some of the world's biggest investment groups including the Blackstone Group and Providence Equity Partners. The other companies making up NTC are Apax Partners, Kohlberg Kravis Roberts & Co., and Permira Advisers. Certainly, the consortium's commitment to pushing the deal that would have allowed the group to buy TDC for $15.3 billion including its net debt was high, and market expectations that the agreement would go through were considerable.

Investors were clearly disappointed by Monday's development that thwarted NTC's attempts to buy out the group, as the telecommunication company's shares plunged nearly 3 percent from the previous session to 29.81. The stock had actually increased nearly 40 percent in value since the NTC consortium announced they would be bidding for the telecommunications group. Granted, the immediate fall in the company's share price was only to be expected by ATP.

Yet retaining the value of TDC is perhaps higher for ATP, given that its 5.51 percent shareholding in the telecom group represents about 9 percent of its overall equity portfolio. Analysts agree that ATP has clearly indicated that keeping the domestic telecommunications group under the current management would actually lead to more profits in the longer-term even as the European telecom market becomes ever more aggressive in ensuring their survival, rather than in the hands of a group of international investors.

Nevertheless, local Danish media broadly expect the TDC's board of directors to accept the NTC offer. The offer period expires Thursday.

Copyright 2006 by United Press International

Explore further: New algorithm lets autonomous robots divvy up assembly tasks

Related Stories

Image: XMM-Newton self-portraits with planet Earth

14 minutes ago

This series of images was taken 15 years ago, a couple of months after the launch of ESA's XMM-Newton space observatory. These unique views, showing parts of the spacecraft main body and solar wings, feature ...

Evolution of the Antarctic ice sheet

15 minutes ago

ULB study sheds a new light on the stability of the Antarctic ice sheet. It shows for the first time that ice rises (pinning points that keep the floating parts of ice sheets in place) are formed during the transition between ...

Nanosilver and the future of antibiotics

17 minutes ago

Precious metals like silver and gold have biomedical properties that have been used for centuries, but how do these materials effectively combat the likes of cancer and bacteria without contaminating the ...

Recommended for you

Job-sharing with nursing robot

35 minutes ago

Given the aging of the population and the low birthrate both in Japan and elsewhere, healthcare professionals are in short supply and unevenly distributed, giving rise to a need for alternatives to humans ...

Robots can recover from damage in minutes (w/ Video)

1 hour ago

Robots will one day provide tremendous benefits to society, such as in search and rescue missions and putting out forest fires—but not until they can learn to keep working if they become damaged.

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.