Telenor Group said it has agreed to acquire 54 percent of the shares in the Finnish telecom operator DNA for EUR 20.90 each in cash, or a total of EUR 1.5 billion. The acquisition is through separate agreements with DNA's two largest shareholders, Finda Telecoms and PHP Holding, which own 28.3 percent and 25.8 percent respectively. Completion would trigger a mandatory public buy-out offer of the remaining DNA shares at the same price.
The takeover would mark its entry to Finland and Telenor said it would give it a strong position in fixed and mobile communications in an attractive and growing market, and strengthen its position in the Nordic region. The deal requires regulatory authorisation and approval by general meetings of the sellers on 06 May. Some Finda and PHP shareholders have given irrevocable undertakings to vote in favour of the transactions.
Telenor expects the transaction to be completed during the third quarter of 2019. Subject to the outcome of the mandatory tender offer, Telenor's intention is to keep DNA's listing on the Nasdaq Helsinki stock exchange.
Number three player
DNA is the third-largest mobile operator in Finland, after Telia and Elisa, with 2.9 million subscribers and a 28 percent market share. The operator has increased its mobile service revenues by 9.3 percent per year over the past three years. It is the second-largest fixed broadband provider and the largest cable TV provider in Finland. In 2018, DNA reported revenues of EUR 912 million, EBITDA of EUR 285 million, and operating cash flow of EUR 147 million.
Telenor said it sees “solid” potential for DNA to continue to grow and develop, by continuing to offer more advanced products and upselling to existing customers, strengthening its position in the business segment, and using Telenor's global scale and strong position in the Nordic region. The transaction is expected to generate material synergies within procurement, roaming, and best practice sharing.
Telenor added that the deal is another step in Telenor's strategy to focus on modernisation and value creation within core telecom in the Nordic region and Asia, while fulfilling its priorities and shareholder remuneration policy.
The transaction would increase Telenor's net debt to EBITDA ratio by 0.4 times to 1.3 times, assuming 54 percent ownership share, and will be funded using existing cash resources and credit facilities. The purchase price compares to DNA's last closing share price of EUR 19.46 and a high of EUR 22.02 in the past 12 months. DNA listed on the stock market in November 2016 at a price of EUR 10.10 per share, giving it a market capitalisation of EUR 1.34 billion then.
