TeliaSonera challenges Blackstone's Lattelecom bid

According to press reports, TeliaSonera has challenged Blackstone's bid for Lattelecom, the Latvian telecommunications company. Blackstone offered to acquire the business in September 2007 for $575m (September 2007, page 29), but the new Latvian Government (appointed after the buyout was announced), led by Prime Minister Ivars Godmains, rejected the management buyout in January and said it would open to up the privatisation process to other bidders (February 2008, page 9).

TeliaSonera, which owns 49% of both Lattelecom and mobile telephone group LMT (Latvijas Mobilais Telefons SIA) has announced that it will offer to buy the Latvian Government out of both the country's main telecoms groups for about $1bn. The Government has previously rejected TeliaSonera owning both companies as it would give it three-quarters of the Latvian telecoms market.

Both Blackstone and TeliaSonera each submitted new proposals at a three-way meeting with the Latvian Prime Minister at the beginning of February. According to the financial press Blackstone repeated its offer to acquire TeliaSonera's 49% stake in Lattelecom, but said it was now prepared to wait to buy the Government's 51% stake. The US GP also proposed to run the telecom business as a joint venture with the Government for up to three years, after which time either side will have the right to buy the other out.

The Government is due to respond at the end of February as to which bid it would like to accept.

In July last year, the previous government agreed to buy back 49% of Lattelecom from TeliaSonera and sell the entire group to the management. Blackstone led a consortium of investors that announced the $575m MBO of the group. In September, the Government also approved the financing package of EUR395m that was assembled by a constellation of banks including: Unicredit, Nordea, Parex Bank and DnB Nor.

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