Monday: Pension insurers Varma buy Icelandic stake in Elisa

Unique deal involves state agreement to buy at least half of Varma acquisition

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Icelandic investor Thor Björgólfsson’s company Novator has sold its more than 10% holding in the Finnish telecoms operator Elisa to the pension insurance company Varma.
      Varma is to pay EUR 11.20 per share in a deal estimated as worth around EUR 194 million.
      The selling price is slightly below Friday’s closing price in Helsinki, as Elisa finished the day’s trading at EUR 11.41.
      One unique feature of the transaction is that Varma have the right to demand the Finnish state buy at least half of the acquired Elisa stock at the Monday purchase price.
     
No actual timetable for the onward sale of the shares has been made public.
      According to a statement from the Ministry of Finance, the right can be taken up when the state has made the necessary financing decisions.
      Defence Minister Jyri Häkämies (National Coalition Party), whose portfolio also includes the steering of state holdings, reported on Monday morning that the state wished to stabilise the ownership arrangements of telecoms operator Elisa, which is regarded as being of significant strategic importance. Häkämies believes it is important that the Novator shares do not end up in the hands of speculators.
     
Rumours of a sale had been keeping Elisa shares in the frame all of last week.
      Last Monday the stock took a heavy fall, when the price declined from more than EUR 13 to below 12 euros.
      Varma will become Elisa’s largest single shareholder after the purchase.
      Rival teleoperators DNA abandoned talks on buying the stock on Friday. The DNA Chairman Risto Siivola did not divulge whether the discussions had broken down over disagreements on the price.
      “In these circumstances it is extremely difficult to determine the price”, said Siivola on Friday in a reference to the plunging share prices seen of late.
      DNA’s decision was also reportedly influenced by the fact that the company had not received a firm ruling in advance on what terms the Finnish Competition Authority would have required for approval of the deal.
     
According to information received by Helsingin Sanomat, other companies interested in the Elisa shares had included the Norwegian Telenor, the Russian Altimo, and the Finnish operator Tele2.
      The collapse of share prices in Iceland has created a buyers’ market for bargain hunters.
      Many Icelandic companies are selling their foreign investments to repatriate the revenues and shore up the country’s economy.
     
The market took the news of the acquisition positively.
      On Monday morning, the Elisa stock soared more than 8% after trading opened in Helsinki.
      Shortly after 1 p.m. the rise had steadied and Elisa was up around 5%.
     
Trading in Helsinki was in any event buoyant, with stocks rebounding sharply from Friday's heavy falls.
      The OMX Helsinki Allshare index, which had fallen below 5,800 points on Friday, was on the move upwards from the start of trading, and by 13:50 it had climbed 5.78% to more than 6,130. The market value weighted Helsinki 25 index was also forging ahead by more than 6%.
      Nordea Bank shares were up around 6%, as the measures to combat the current financial crisis announced by Eurozone leaders in Paris on Sunday received a cautious welcome from investors.
      Nokia stock initially jumped more than 8%, but then drifted lower and was riding around 2.5% above its Monday opening price in the early afternoon.
      Forest industry giants Stora Enso and UPM-Kymmene also performed well in the morning, gaining 10.3% and 7.5% respectively.
     


Previously in HS International Edition:
  Icelandic investor attributes Elisa uproar to "nationalism" (7.1.2008)
  DNA holding talks with Icelandic investor on Elisa shares (8.10.2008)

Links:
  Thor Björgólfsson (Wikipedia)
  OMX Group Helsinki OMXH25 tracking
  Elisa
  Varma
  Novator

Helsingin Sanomat