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TDC Close to $12B Sale?

The long-running saga surrounding the sale of Danish incumbent carrier TDC A/S (Copenhagen: TDC) looks set to end with an acquisition worth up to $12 billion by a consortium of private equity firms, according to reports in the Danish and international media.

The carrier, which has been the subject of M&A speculation since it abandoned its 9.5 percent stock ownership ceiling in March this year, is believed to be on the verge of announcing a deal worth 380 Danish Kroner ($60.07) per share, or about DKK75 billion ($11.8 billion) in total, according to Danish newspaper Børsen. (See Eurobites: Rankings & Rumors).

TDC serves 14.7 million customers in total, 7.5 million of whom are in Denmark.

The successful private equity consortium, which, according to Børsen, has set up a holding company called Nordic Telephone Company, includes Apax Partners, The Blackstone Group, Kohlberg Kravis Roberts, Permira, and Providence Equity Partners.

TDC declined to comment on any aspect of merger and acquisition activity, even though it admitted last month that it was checking out some offers. Its share price rose this morning by DKK7.5, more than 2 percent, to DKK362. (See TDC to Consider Offers).

But the Nordic Telephone consortium might still have a battle on its hands, as another private equity group, including Apollo Management, Silver Lake Partners has also been checking out TDC. That group is believed to have considered a joint bid with Swisscom AG (NYSE: SCM), but any such plans were put in doubt late last week when the Swiss government, which still owns 61 percent of Swisscom, said it would vote against "a possible acquisition" in favor of the redistribution of capital to shareholders.

That decision also ends the Swiss carrier's hopes of buying Irish carrier Eircom Ltd. (London: EIR). (See Swisscom Ponders M&A and Swisscom Eyes Eircom.)

While TDC remains silent on the situation, it hasn't been sitting on its hands waiting for something to happen. In the past year it has laid off staff, strengthened its position in the Scandinavian business services market with the acquisition of Song Networks, and acquired a couple of systems integrators in key markets. (See TDC Reports 2004, Cuts Jobs, TDC Buys Song, Reports Q3, TDC Buys Swiss Integrator, and TDC Buys Dotcom in Sweden.

It has also flogged its directories business for DKK4.85 billion ($766 million), and today announced the sale of its enterprise services arm in the Czech Republic for an undisclosed sum. (See TDC to Sell Contactel and TDC to Sell Directories Biz.)

And its financial results have been improving: Earlier this month TDC announced a quarterly increase in revenues and earnings, and raised its full year outlook. (See TDC Reports Q3, Raises Outlook.)

TDC has a net debt of DKK21.1 billion ($3.3 billion) that any new owners would have to take on board.

In addition to being the dominant service provider in Denmark, TDC offers fixed line services in Finland, Norway and Sweden (the former Song business), Hungary, and Switzerland, where it is the second biggest service provider. It also has mobile service provider operations in Austria, Germany, Lithuania, the Netherlands, Oman, Poland, Switzerland, and the U.K. (See TDC to Launch EasyMobile.)

Should the reported deal go through it would rival the acquisition of Italian carrier Wind Telecomunicazioni SpA in value, and be the latest in a string of European telecom acquisitions. (See Enel Sells Wind to Weather, Eurobites: Exit Strategies, Eurobites: So Shrink Me, and Europe Is M&A Feverish .)

— Ray Le Maistre, International News Editor, Light Reading

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