Telenor Takes on Telia in Nordics With $3.1 Billion DNA Offer
Telenor to Buy Majority Stake in Finland's DNA for $1.7 Billion
(Bloomberg) -- Norwegian mobile operator Telenor ASA is acquiring a majority stake of Finland’s DNA Oyj and will offer to buy the rest for a total of 2.77 billion euros ($3.1 billion), challenging Telia Co. for dominance in the Nordic region.
Telenor will pay 20.90 euros a share in cash for the 54 percent of DNA held by Finda Telecoms Oy and PHP Holding Oy, the company said in a statement on Tuesday. That deal triggers a mandatory bid by Telenor for the rest of DNA’s shares at the same price. DNA stock rose 8.2 percent to 21.10 euros as of 3:04 p.m. in Helsinki.
By pursuing DNA, Telenor is entering Finland to strengthen its hold in the region. After chasing growth in Asia and eastern Europe, the two largest mobile operators in the Nordics are training their eyes on markets closer to home. Telenor has sold units in central Europe and India, while Sweden’s Telia is approaching the end of a protracted push to leave Central Asian countries.
The deal will give Telenor control of the third-largest mobile operator in Finland, a country with the highest mobile data usage in the world. DNA is also the nation’s second-largest broadband service provider and operates its biggest cable-TV service. Morgan Stanley analysts said the price implies a richer valuation for DNA than other recent industry deals.
The two former monopolies will now be vying for customers in all the Nordic countries except Iceland; Telenor is already the second-largest operator in Denmark and holds the No. 3 position in Sweden. Telia last year expanded its footprint on Telenor’s home turf by buying TDC A/S’s Norwegian business for about $2.6 billion, and it’s also planning to add Swedish and Finnish TV channels by buying Bonnier AB’s television operations for $1 billion.
The Norwegian company, which has become the target of activist investor Constructive Capital, still has interests in parts of Asia, including Myanmar, Thailand, Bangladesh and Malaysia.
What Bloomberg Intelligence Says:
Telenor “is executing well on cost-cutting, particularly in core Nordic markets, providing a solid platform for much-needed investment to boost sales growth.”
--Matthew Bloxham, telecom analyst
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The increase in Telenor’s leverage after the deal “could disappoint some investors who were hoping for special dividends/returns when Telenor increased its leverage target at the start of the year,” the Morgan Stanley analysts led by Terence Tsui wrote in a note.
Telenor’s chief financial officer, Jorgen Rostrup, said the company doesn’t feel any pressure to buy out the remaining shareholders in DNA.
“We are really focused on this being viewed as a friendly approach, and a friendly buy-in,” Rostrup said in a phone interview. “We will start with 54 percent and then we will leave it up to shareholders” to decide what stake Telenor should have.
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