Main owners of TeliaSonera reject buyout offer by France Télécom

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The Finnish state is waiting for more offers for the purchase of TeliaSonera, said Minister of Defence Jyri Häkämies (Nat. Coalition Party) on Thursday. Häkämies, who is also responsible for issues related to state ownership of corporations, made his statement soon after France Télécom had announced a bid for the Finnish and Swedish-owned TeliaSonera.
      In what was described as a preliminary offer, the value of TeliaSonera was set at about EUR 30 billion.
      With its 14% holding, the Finnish state is the second-largest owner of TeliaSonera stock, right after the Swedish state.
     
“This is the first concrete offer for TeliaSonera, and it is only preliminary. It is common in this kind of a process, and there can be other offers”, Häkämies said during a visit to China.
      The Financial Times newspaper says that there are expectations in the market for a competing bid from Norway’s Telenor.
      Both the Board of Directors of TeliaSonera and the Swedish state rejected the France Télécom offer, but Häkämies said that Finland would still examine the bid before making a decision.
     
The preliminary offer by France Télécom is in force for two weeks.
      The company’s CEO Didier Lombard downplayed the rejection of the offer by the TeliaSonera directors, saying in a conference call with journalists and analysts that it is normal for a board of directors to try to push up an offer in the early stages of negotiations.
      “This is a merger of two companies, not a takeover. It is not possible to implement something like that aggressively. That is why we made a non-binding offer."
     
In Sweden the offer was dismissed as ridiculously low.
      “If they were to increase the proportion of cash, it might go through. On the other hand, they would need to borrow money for that, and they do not want to do that”, said analyst Bengt Mölleryd.
      France Télécom is offering owners of TeliaSonera a premium of 39 per cent over the current share price. However, the premium was calculated on the basis of the TeliaSonera share price on April 15th. At that time, rumours spread in the market that France Télécom was interested in such an acquisition, which pushed up the value of TeliaSonera stock. Compared with Wednesday’s closing price, the French offer had a premium of less than five percent.
     
France Télécom promises to pay for the shares in both cash and with its own shares.
      It offers to buy 52% of TeliaSonera shares for EUR 6.75 apiece, and to pay for the rest with its own shares. Under the plan, 11 TeliaSonera shares would entitle the holder to three new shares in France Télécom.
      Examined against Wednesday’s closing price, the cash offer for TeliaSonera stock includes a premium of 17%. However, the exchanges of shares would prove to be far less lucrative for TeliaSonera’s shareholders - ten percent weaker than Wednesday’s quoted prices.
     
This has eroded further after the offer was made public, since the share price in TeliaSonera rose by more than seven percent on Thursday, and that of France Télécom declined by four percent.
      If the French offer is examined against the average price for TeliaSonera shares, the offer appears weaker still.
      Lombard of France Télécom insisted that employees would not be sacked as a result of the merger. He also praised the level of knowhow in the field in the Nordic Countries.
      “We do not imagine ourselves to be at the centre of the world here in Paris”, he said.


Previously in HS International Edition:
  Rumours of France Télécom interest in TeliaSonera send stock soaring (17.4.2008)
  France Télécom confirms interest in TeliaSonera (18.4.2008)
  TeliaSonera rejects France Télécom buyout offer (5.6.2008)

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