The largest Danish telecom operator TDC accepted a $ 6.7 Bn takeover offer from three local pension funds and Macquarie, the Australian infrastructure investor. The consortium led by Macquarie Infrastructure and Real Assets (MIRA) pitched at DKK 50.25 ($ 8.3) per share, valuing the group at around DKK 40.3 Bn ($ 6.7 Bn). MIRA would take half of the ownership and the rest would be split equally between the 3 other investors – Danish pension funds PFA, PKA, and ATP.
The offer was a 34.1% premium to the closing share price of DKK 37.47 ($ 6.2) as of 7 February 2018, and an increase of 6.3% over the initial $ 6.3 Bn unsolicited bid the consortium made the preceding week. News of the first approach and the subsequent agreed bid, helped TDC’s shares surge. However, the current deal still values TDC at less than half the € 13 Bn it fetched in 2005 when it was sold to five private equity firms in what was then Europe’s largest leveraged buyout.
TDC’s board of directors believe the consortium’s offer represents both the most compelling value and the highest transaction certainty benefiting the shareholders, according to Chairman Pierre Danon. Consequently, TDC must drop its planned $ 2.5 Bn takeover of Swedish MTG’s broadcasting and entertainment business as a condition of the Macquarie-led takeover offer.
The consortium intends to make ‘material investments’ into the network infrastructure and split the company in two with one unit focused on its telecommunications network and the other on customer service and content. The creation of the new business unit, together with substantial investment in customer service, will allow TDC’s existing customer-facing business to focus solely on servicing its client base through the development of new products, the delivery of premium content, and sourcing new customers by increasing the number of partnerships it has with other networks. The consortium pledged to bring 1 Gb per second broadband to all Danish households by the middle of the next decade.
TDC has more than 3 million mobile customers in Denmark and Norway offering internet, television and mobile telephony under more than 10 brands and employs around 8,500 people. It owns 270,000 km of fiber and copper cables in Denmark.
MIRA has a history of investing in such businesses as the world’s largest infrastructure asset manager. It is part of Macquarie Group, a diversified financial group providing asset management, banking, advisory and risk and capital solutions. MIRA pioneered infrastructure as a new asset class for institutional investors. As of 30 September 2017, MIRA had assets under management of more than $ 118 Bn invested in 137 portfolio businesses, ca. 300 properties and 4.5 M hectares of farmland.
Pension funds seeking steady returns are regular investors in Denmark’s infrastructure and have played an important role in the consolidation of former state companies. PFA is the largest commercial pension company in Denmark with DKK 500 Bn (€ 67 Bn) under management and ca. 1.2 M individual customers from a wide range of large companies and organizations in the country. PKA is one of the largest pension service providers for labor market pension funds in Denmark. It has a special focus on long-term infrastructure investments and has invested ca. DKK 20 Bn (€ 2.7 Bn) in Danish and foreign infrastructure. ATP is an independent self-governing regulated pension fund established under its own act in 1964 with a view to ensuring a larger basic pension for the Danish population as a supplement to the state retirement scheme. ATP is funded by mandatory contributions and manages assets of more than DKK 700 Bn (€ 94 Bn).