TDC in U-turn as Macquarie-led $6.7bn bid accepted

The new offer, alongside three Danish pension funds, has been approved days after a first attempt was deemed ‘not in the best interest’ of shareholders.

Danish telecoms firm TDC has urged its shareholders to accept a Dkr40.3 billion ($6.7 billion; €5.4 billion) offer from a consortium led by Macquarie Infrastructure and Real Assets, just five days after rejecting a bid from the group.

MIRA’s €4 billion MEIF5 fund has teamed up with local pension funds PFA, PKA and ATP for the bid, with MIRA holding a 50 percent share of the consortium and the pension schemes each owning about 16.7 percent.

Their offer of Dkr50.25 per share represents a 34.1 percent premium to TDC’s share price on February 7, prior to the consortium’s original proposal, and an 8 times multiple on its 2017 EBITDA. That bid, reported to be worth Dkr47 per share, was deemed “not in the best interest of TDC’s shareholders and stakeholders”, according to the company’s statement last week.

However, the new offer “represents both the most compelling value and the highest transaction certainty”, according to Pierre Danon, chairman of TDC, who said the acceptance came after a “careful review of our options”. Swedish telecoms group Telia, the largest shareholder of which is the Swedish state, revealed it had also analysed making an offer for TDC.

A previously announced $2.5 billion purchase by TDC of Sweden’s Modern Times Group, a digital TV service operator, will be scrapped as a condition of the bid made by Macquarie, PFA, PKA and ATP, despite only being agreed at the start of this month.

“We are pleased that our constructive dialogue with the board of directors has resulted in us receiving their full recommendation of our offer to acquire all shares in TDC,” said Allan Polack, chief executive of PFA. “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.”

The deal is the second in the sector pursued by MEIF5, after the fund’s purchase of Polish telecoms and broadband provider Inea completed last week.

Ratings agency Standard and Poor’s is currently predicting an adjusted debt/EBITDA average of 3 times on the continent in the sector. “The forecast decline in leverage is mainly due to cost savings and improved margins, as opposed to revenue growth or debt reduction,” said Mark Habib, director and sector lead at S&P.