TDC Is Back in Play With Cash Takeover Bid From Giant Funds

(Bloomberg) -- Denmark’s TDC A/S is in play after a group led by Danish pension funds made an unsolicited attempt to take over the former phone monopoly.

TDC, with a market value of 35.7 billion kroner ($5.9 billion), spurned talks about a cash takeover offer from pension funds ATP, PFA, PKA and Macquarie Infrastructure and Real Assets in a bid to stay independent. The carrier last week agreed instead to acquire the lion’s share of Modern Times Group AB of Sweden.

The MTG deal may have made TDC more vulnerable to further offers, after its shares plunged over a plan to issue equity to fund the purchase. Apollo Global Management LLC has circled in the past and rival Telia AB has long been seen as a likely bidder, despite potential anti-trust hurdles in Denmark, where the Swedish company has a wireless business.

TDC says investors are better off sticking with its current strategy, including its $2.5 billion purchase of MTG’s TV stations and an online streaming service. Shares of TDC were down 6.4 percent through Wednesday’s close after it revealed the acquisition on Feb. 1. The stock added 20 percent Thursday after the funds’ interest was revealed. ATP said Thursday it’s still interested in TDC, which provides opportunities in infrastructure.

“This bid clearly demonstrates the underlying value in TDC’s business,” Tawhid Ali and Andrew Birse, portfolio managers at AllianceBernstein, said in an emailed comment. “We don’t believe that the proposed merger with Modern Times Group is the best course of action to maximize value for TDC shareholders.”

AllianceBernstein holds about 2.3 percent of TDC, according to data compiled by Bloomberg.

Pernille Erenbjerg has spent the past seven years at TDC -- first as chief financial officer and later as chief executive officer -- trying to bulk up the carrier to stay independent amid a flurry of takeovers in the fractured European telecommunications market and speculation that the Danish company would be bought by private equity companies or a larger Nordic rival. In 2014, TDC acquired Norwegian cable TV provider Get AS for about $1.75 billion.

The past week shows that TDC, one of very few remaining European carriers small enough to be easily absorbed by a larger rival, is very much still at the center of buyout speculation and interest. Telia, a company that has been selling off far-flung investments in Asia, has recently been linked again to takeover speculation around the Danish carrier.

TDC didn’t provide details on the terms of the offer it received from the consortium. According to newspaper Borsen, the funds bid 47 kroner a share, or more than 25 percent above Wednesday’s closing price. In another report, the business website of newspaper Jyllands-Posten said the funds Wednesday raised their offer to 48 kroner.

“We’re interested in developing IT infrastructure in Denmark, and we believe we can make a good business out of it,” ATP Chief Executive Officer Christian Hyldahl told journalists in Copenhagen.

ATP is looking forward to continuing talks, Hyldahl said at a news conference. The MTG purchase wasn’t part of the picture when the funds’ bid was made, Hyldahl said, adding it’s now up to the board of TDC to make the next move.

Representatives for TDC didn’t return additional requests for comment. Telia and MTG declined to comment. MTG stock fell as much as 4.3 percent on Thursday, but pared the decline to 2.4 percent to 376.80 kronor at 12:47 p.m. in Stockholm.

If the funds do wind up buying TDC, it won’t be the first time the company is in similar hands. The carrier was privatized in the 1990s and sold in an initial private offering by the Danish state. In 2005, five private equity funds teamed up to buy TDC for $15.3 billion -- Europe’s largest leveraged buyout at the time -- but ended up just short of the 90 percent of shares they would have needed to delist the carrier from the stock exchange. Over the next 8 years, the funds gradually sold off their holding and finally withdrew completely.

TDC said it remains open to options that offer greater value to shareholders.

--With assistance from Crayton Harrison Niclas Rolander and Thomas Seal

To contact the reporters on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net, Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net.

To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Rebecca Penty at rpenty@bloomberg.net, Kim Robert McLaughlin, Phil Serafino

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