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Denmark's TDC to buy Norway cable provider Get AS for $2.2 billion

Staff writer |
TDC A/S has entered into an agreement to acquire Get AS for a total consideration of NOK 13.8bn (~DKK 12.5bn) on a cash and debt free basis.

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The purchase price represents a multiple of 10.5x pre-synergies and 9.3x post synergies on 2015 estimated EBITDA.

TDC expects to finance the transaction through a combination of senior unsecured EMTN bonds and hybrid bonds. The transaction will imply a reduction in TDC's dividend payout to maintain investment grade rating, but is expected in due course to enhance Equity Free Cash Flow per share, see further details below.

The two companies display complementary strengths across tv, broadband and voice. Pro forma 2013; 29% of TDC's revenue derived from cable tv and 22% of revenue originated outside Denmark, and both figures are expected to increase going forward. The transaction is expected to result in more than 10% Equity Free Cash Flow accretion by 2016.


Since 2000, Get has, with 2005 as the only exception, annually delivered double-digit percentage growth and is today one of the most innovative and profitable cable tv companies in Europe. The Norwegian telco and cable tv market is an attractive market, reflecting the overall strength of the Norwegian economy.

Get's CEO since 2000 Gunnar Evensen will continue after closing of the transaction.

The transaction is subject only to competition approval from the Norwegian competition authorities and it is expected to close in Q4 2014.

TDC has a long-standing and successful presence in the Danish cable-tv market through YouSee with around 1.2 million tv customers of whom 0.5 million are also broadband customers. With the acquisition of Get, TDC enters into the consumer market in Norway, positioning TDC as the leading Scandinavian cable tv company, serving close to 1.7 million households in Denmark and Norway.

Furthermore, by combining the networks of TDC Norway and Get, TDC will have a highly advanced Norwegian infrastructure with direct access to a wider part of the Norwegian business market.

The acquisition of Get is expected to deliver both cost and revenue synergies, mainly related to the commercial benefits from a larger scale Scandinavian cable tv operation, utilizing Get's network for business customers, and through other cost savings. TDC estimates total annual run-rate synergies to amount to NOK ~185m (DKK ~167m) to be fully realized by 2017.

TDC will adjust the dividend payout from approximately 90% to approximately 60% of Equity Free Cash Flow from the financial year 2014, which is a dividend yield in line with telecom and cable tv peer companies. In addition to this, there is the possibility of limited share buy backs so long as the investment grade rating is maintained.

With regard to TDC's leverage policy, the present maximum leverage ratio (net interest bearing debt/EBITDA) of 2.2x will no longer apply, but TDC is still committed to maintaining an investment grade rating. TDC's leverage ratio on a pro forma basis (adjusted for the acquisition of Get) would have been 2.9x[1] as of 30 June 2014.


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