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The Danish Rollercoaster

12 February 2018 by lberuti

TDCDC ( TDC A/S ) is one of the few remaining European telecommunication operators small enough to be easily absorbed by a rival and has long been the centre of buyout speculations. Telia AB has been seen as a likely bidder, and Apollo Global Management has circled the Danish carrier in the past. Recently, TDCDC agreed to buy Modern Times Group AB for $2.4Bln, in a move that many investors saw as a defensive measure to fend off interests. But today, after hours of speculation during which TDCDC’s risk premium was pushed around in the morning, the company eventually announced that it had agreed to be bought for $6.7Bln by a group led by Danish pension funds and Macquarie Infrastructure and Real Assets, and that it will walk out from its deal with MTG. Should the consortium offer succeed, a leveraged financing should follow. Even if leverage targets were less aggressive than in traditional LBO, TDCDC’s ratings should still move into high-yield territory and its 5-year risk premium ended the session 50bps wider at 148bps.