TeliaSonera bids for control of 'distressed' Baltic operators

TeliaSonera has launched a US$688 million bid to acquire the remaining shareholdings of its two mobile subsidiaries in Estonia and Lithuania. The offer, coming at a time when both firms are struggling with severely depressed economic climates, is part of TeliaSonera's strategy to buy out smaller shareholders in core businesses, as it looks to generate greater efficiency through overall control.

TeliaSonera, which already has a 60 per cent holding in Lithuania's TEO LT and Estonia's Eesti Telekom, claimed that the cash offer represented (respectively) a 31 per cent and a 24 per cent premium. However, local commentators are calling for their governments to dismiss the offers as being too cheap. Stockmarket analysts have reported few signs that small shareholders are selling their holdings in reaction to the offer, while institutions appear to be waiting for a higher offer.

However, this would appear unlikely. The CEO of TeliaSonera, Lars Nyberg, said at a press conference that this price was fair, and there wouldn't be a new offer at a higher price. "The offer we've made for Eesti Telekom is not far from the highest share price of all times."

Stockholm-based equity analyst, Urban Ekelund, said that Sweden's corporate sector still viewed the region as a long-term growth opportunity, and suggested that "now is a good time to buy because prices have fallen and owners in Estonia and Lithuania may be under pressure to sell."

Given that TeliaSonera has been focusing on emerging markets in Eastern Europe and beyond, this move to gain further control of its Baltic subsidiaries is seen as logical. The firm recently triumphed by increasing its stake in Turkcell to over 60 per cent following the intervention of an arbitration tribunal, but has been less successful - after years of trying, in boosting its 44 per cent holding in MegaFon, Russia's third largest mobile operator.

For more on this story:
Financial Times

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