Shares in TDC surged after the Danish telecoms operator received an unsolicited bid from three pension funds and Macquarie.
TDC’s board rejected the offer of DKr47 per share, a 25 per cent premium to Wednesday’s closing price, but its shares rose 16 per cent on Thursday morning to DKr43.60. The bid values it at about DKr38bn ($6.3bn).
The former Danish monopoly operator made a poorly received $2.5bn offer last week for the entertainment assets of Sweden’s Modern Times Group, the latest in a series of proposed media-telecoms convergence deals.
The consortium of the PFA, ATP and PKA pension funds and Macquarie Infrastructure said it wanted to start a dialogue with TDC’s board, as its offer represented “excellent value” for shareholders.
Rumours have swirled in recent months of broader interest in TDC. Telia, the former monopoly operator in Sweden, has expressed its interest, particularly in TDC’s broadband assets in Denmark and Norway.
The consortium said it had prepared “detailed plans for TDC”, including large investments in network infrastructure and no job losses.
It said it would aim to offer Danish households broadband speeds of 1GB per second by the mid-2020s, pointing out that the government’s target was 100MB per second.
TDC has been taken off the stock market before with five private equity firms buying it in 2005, before relisting it five years later. It now has a diverse shareholder base with only T Rowe Price, the US fund manager, owning more than 5 per cent of its shares.
We are confident in the standalone prospects of TDC
Its board reiterated its support for its own bid for most of MTG, a deal it said would create Europe’s first true integrated telecoms and media group offering everything from TV channels to broadband and mobile subscriptions.
But so-called convergence deals around the world have been punished by investors and this was no different, with TDC falling 8 per cent after announcing its bid.
The board said the bid was not “in the best interest” of shareholders. It added: “We are confident in the standalone prospects of TDC and convinced of the incremental value creation potential of the announced combination with MTG’s Nordic Entertainment and Studio division.”
The bid represents only the latest in a flurry of proposed transactions in the Nordic telecoms sector.
Kinnevik, the Swedish investment group, is backing a plan to combine Tele2 and ComHem, two of its biggest shareholdings, in another convergence deal.
The Swedish group is also the biggest shareholder in MTG, which had been tipped to join the combined company but instead opted for TDC. MTG’s shares were down 3.4 per cent on Thursday morning.