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Impact Investing

IPE special report May 2018

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ATP CIO on hedge fund fears in TDC bid

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DENMARK – Hedge funds in the UK and US are concerned amid the proposed offer by the Nordic Telephone Company to buy Danish phone giant TDC, which is opposed by its largest shareholder, ATP.

ATP chief investment officer Bjarne Graven Larsen told IPE the scheme received several calls following the public release of its opposition to the offer. “They are worried about their position,” he said.

TDC has a general 19.5% shareholder distribution in the US, and 34.3% in the UK.

ATP – which owns a 5.6% stake in TDC - rejected the Nordic Telephone Company’s offer price of DKK382 (€51) per share, saying it was not “sufficiently attractive”.

According to reports, the scheme believes TDC can operate at higher profits than the price offered by the Nordic Telephone Company.

“In the opinion of ATP, it will be possible to generate an attractive long-term return by continuing and accelerating the initiatives already started up by the TDC management,” said an ATP press statement.

“This would include, among other things, increased focus on and continuing efficiency improvements of the company’s core activities, divestment of non-core activities and optimisation of the company’s capital structure.”

The offer needs 90% shareholder approval before the takeover can go through.

According to the TDC website, there are approximately 84,000 shareholders who own 198.4 million shares in TDC. Roughly 82,000 shareholders are private investors and employees, who jointly own about 15% of TDC.

The largest shareholders include TDC itself (1.85%), ATP, Franklin/Templeton (5%) and the Capital Group (4.9%).

The offer by the Nordic Telephone Company – which comprises of private equity firms Apax Partners Worldwide, Kohlberg Kravis Roberts & Co., Blackstone Group, Permira Advisers and Providence Equity Partners – expires on January 12.

IPE understands that the Nordic Telephone Company has approached TDC for shareholders’ contact details so it can contact them directly. Sources say TDC offered to act as a mail distribution point between the company and shareholders, but refused to release the requested information.

In other news, at the start of December 2005, the Jutland Telephone Pension Fund won its case on appeal to the Danish Supreme Court regarding new legislation used to administer retirement plans for members of company pension funds linked to TDC

In 1999, the Public Servant Pensions Act came into force reducing the retirement age from 67 to 65. Some scheme members objected to implementation of the Act by pension funds as it allegedly affected retirement benefits negatively.

While the Danish High Court found in favour of the scheme members, the Supreme Court found in favour of the Jutland Telephone Pension Fund, stating the scheme was correct to implement the new legislation.

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