Telenor acquires 54% stake in DNA for $1.7bn

09 April 2019 | Jason McGee-Abe

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Telenor Group is moving into the Finnish market after announcing today it will acquire a 54% majority stake in DNA in a deal worth around $1.7 billion.

Telenor has entered into separate agreements with DNA’s two largest shareholders, Finda Telecoms Oy and PHP Holding Oy, which respectively hold 28.3% (37, 385,454 shares) and 25.8% (34,105,827 shares) of the shares in the company. Telenor has agreed to purchase the shares for €20.90 per share in cash, which equates to just under €1.3 billion (c. $1.7 billion).

“I am very pleased to announce today’s transaction and our entry into Finland, the fastest growing mobile market in Europe. DNA is an exciting addition to Telenor Group, and a natural complement to our existing operations in the Nordic region. Not only are we strengthening our footprint in the Nordic region, we are also gaining a solid position across fixed and mobile in the Finnish market and making room for further value creation,” said Sigve Brekke, CEO of Telenor Group.

“I would like to congratulate DNA’s management and all employees for the impressive journey taking the business to what it is today. We will continue to invest in DNA and will support the team in their focus on delivering high-quality services to the customers in Finland. I am looking forward to welcoming all DNA employees to the Telenor family and to an exciting future ahead of us.” DNA’s operations will continue as normal and the transaction has no impact on Telenor customers’ services.

European market

DNA, which is an integrated fixed and mobile telecom operator, has a solid market position in one of the fastest growing mobile markets in Europe and is the third largest mobile operator in Finland, with 2.9 million subscribers and 28% market share.

In 2018, DNA reported revenues of €912 million, EBITDA of €285 million, and operating cash flow of €147 million. DNA has been ranked as the most attractive employer in Finland, and the DNA brand is among the top ranked brands in Finland.

At the start of the year, the Finnish telecoms group announced that it had agreed to purchase the entire share capital of European mobile operator Oy.

Telenor said it “sees solid potential for DNA to continue to grow and develop, from continuing to offer more advanced products and upselling existing customers, strengthening its position in the business segment, and leveraging on 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”.

Approval & Completion

The transaction is subject to certain conditions, including the approval by the general meetings of the seller entities and required regulatory approvals. Finda Telecoms and PHP Holding’s general meetings are announced to be held on 6 May 2019. Certain shareholders in Finda and PHP have through irrevocable undertakings agreed to vote in favour of the transactions in the Finda and PHP general meetings.

Completion of the transaction will trigger a mandatory public tender offer for the remaining outstanding shares in DNA by Telenor. Telenor has announced that the cash consideration per share to be offered in the mandatory tender offer will be €20.90.

Telenor expects the transaction, which will increase Telenor’s net debt/EBITDA by 0.4x to 1.3x (assuming a 54% ownership share), to be completed during Q3 2019.