Copenhagen-based TDC increased its offer for all outstanding shares to SEK 82.50 ($11.24), from the SEK 70 ($9.53) per share offer it made earlier this month. It has also announced that it has secured ownership of 33% of the company’s shares.
The revised offer now values the transaction at a very generous price of SEK 4.7bn ($639.5m), which is roughly a 73% premium on Song’s closing price on September 13, the last day of trading before TDC made its original offer.
The offer comes after a rival bid was submitted last week by Tele2 AB, the Stockholm, Sweden-based pan-European telecoms carrier. It offered SEK 75 ($10.20) for each Song Networks share, making its offer for Song worth SEK 4.4bn ($598m). Tele2 also revealed that it has bought 5.3 million shares, giving it 10.1% of Song.
TDC’s original offer had been agreed to by both Song’s board of directors and shareholders representing more than one third of votes in the company. Following last week’s counter-bid by Tele2, however, Song’s board of directors changed their tune and recommended that shareholders should choose the highest cash alternative.
TDC’s decision to up its original bid means that it now looks to be the favorite. However, it remains to be seen whether Tele2 decides to submit another counter offer. The market is already nervous because TDC and Tele2 are willing to pay too much for Song. If another bid is submitted, the market is unlikely to look favorably on the deal.
Nordic phone companies are expanding mainly through acquisitions as competition in the saturated region is forcing price cuts and leaving little scope for growth. Song Networks is proving to be an attractive target because of its position in the Nordic broadband internet access market, which IDC estimates will grow more than 20% a year through 2007.
Song has 14,300 business customers that use its network in Denmark, Sweden, Norway, and Finland. It has 850 employees, and in its last financial year recorded a net profit of SEK 35m ($4.7m), up from a loss of SEK 2.3bn ($309m), on revenue down 3% at SEK 2.26bn ($306.1m).
