Two of Sweden's smaller broadband players look set to give up on competing with each other.
Bredband2 has tabled a bid worth 18.92 Swedish kroner (US$2.16) per A3 share, which is a premium of around 37.6% compared to the closing price of SEK 13.75 ($2.57) share on Nasdaq Stockholm on September 11.
An A3 "Independent Bid Committee" swiftly and unanimously recommend to shareholders that they accept Bredband2's public takeover bid, which values A3 at around SEK621 million ($71 million)
Shareholders representing nearly 72% of A3 equity have already accepted the Bredband2 bid. Acceptance by shareholders accounting for more than 90% of A3 shares is needed to get the deal over the line.
Assuming no hiccups, Daniel Krook, Bredband2’s CEO, will take over the reins at the enlarged merged entity.
He'll be in charge of a company with 450,000 FTTH connections (15% market share) and a combined turnover of some SEK1.5 billion ($171 million).
By hook or by Krook
According to Realtid, a local news outlet, A3 could have been the predator and Bredband2 the prey. On the face of it, this would seem to make more sense as A3 is bigger than Bredband2.
"We also discussed doing the opposite, that A3 would buy Bredband2, but someone had to place the bid themselves and then it turned out like this," said Paul Moonga, A3 CEO and one of the deal's architects.
Krook gave his own take on how things turned out. "Further back in history when we had discussions about everything from cooperation form to merger, we also talked loosely about who would buy who, but when it all became more concrete, it was also quite clear that we are buying A3 and not the other way around," he said.
Moonga welcomed the opportunity to leverage bigger procurement muscle that comes from pooling resources.
"We get a bigger platform for developing content, customer service and so on, while at the same time getting a better starting point in negotiations – whether it's Viaplay, Disney or someone else," said the A3 CEO.
The A3 acceptance period is slated between October 27 and November 17.
Bredband2 is to hold an EGM on October 16 to vote on the transfer of shares to A3 shareholders, which forms part of the proposed bid.
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— Ken Wieland, contributing editor, special to Light Reading