The takeover battle for internet access provider Song Networks Holding AB shows no sign of slacking, after pan-European telecoms carrier Tele2 AB responded to the improved offer by TDC AS with an even better bid.
Stockholm, Sweden-based Tele2 has now raised its bid from SEK 75 ($10.20) for each Song share to SEK 85 ($11.58) per share. This values the bid at an astonishing SEK 4.95bn ($675m).
The Tele2 bid is a response to the improved offer from Copenhagen-based TDC, which initially bid SEK 70 ($9.53) per share in mid September, but earlier this week increased its offer to SEK 82.50 ($11.24) for a total of SEK 4.7bn ($639.5m).
Song initially agreed to TDC’s original offer, but changed its mind after witnessing the rival bid and counter bid. It is now recommending that Song Networks shareholders should choose the highest cash alternative.
The intense bidding for Stockholm, Sweden-based Song is as a result of its position in the Nordic broadband internet access market, which IDC estimates will grow more than 20% a year through 2007. Tele2 is hoping to snag the company because it offers an entrance into the rapidly expanding broadband market where Tele2 is currently to make an impact.
TDC wants to acquire Song because it believes Song’s network will give it a platform to sell business services.
Song has a sophisticated 19,000km cable network in Denmark, Sweden, Norway, and Finland, used by 14,300 business customers. The company has 850 employees, and in its last financial year recorded a net profit of SEK 35m ($4.7m), up from a loss of SEK 2.3bn ($309m), on revenue down 3% at SEK 2.26bn ($306.1m).
Both Tele2 and TDC now have sizable shareholdings in Song. Tele2 has a 17% stake, whereas TDC has a 33% stake. This had led to some speculation that it would be in the best interests of both bidding companies to agree on a joint ownership of the target company. Under Swedish law, a company cannot be fully merged until 66% ownership is achieved.