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Nordic sees EUR1.1bn offer for TietoEnator rejected

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Nordic Capital, through Cidrion Services, has launched a public tender offer for TietoEnator of EUR15.50 per share, corresponding to a premium of 6.2% to the six-month volume-weighted average share price of the business and a 38% premium to the closing price on EUR11.27 on 19 March 2008; totalling EUR1.1bn. Nordic was attracted to the opportunity of supporting TietoEnator in improving the customer value proposition based on more efficient delivery models and by doing so increasing competitiveness in the Nordic market. The investor would also support management in creating more focused and integrated client services teams and invest in the TietoEnator brand.

However, the board of directors has rejected the offer, claiming the price does not reflect the true value of the company and recommends shareholders and holders of stock options not to sell. The acceptance period closed 28 April 2008.

After Nordic Capital announced the offer, the share price rose in response to the takeover bid, to SEK 159 per share. There are also mounting rumours in the market that Telenor will team up with Blackstone to launch a competing offer of EUR18.5 per share, 23.3% higher than what Nordic Capital was prepared to bid.

According to the Norwegian and Swedish press, there has been previous speculation to whether EDB, a Norwegian IT services group, and TietoEnator will be merged. Telenor is already the largest shareholder in EDB, and therefore an offer seems plausible. According to press reports, EDB is in the process of acquiring 10% of the business, and hence blocking the 90% acceptance rate Nordic Capital needs. However, EDB released a press release on 22 April stating it is reviewing strategic options.

TietoEnator is an IT service company that develops and hosts digital businesses and also provides consulting services. In the international market, it focuses on selected competence areas and partners for telecom R&D services and its good market position in the forest and oil & gas industries.

TietoEnator shares are listed on OMX Nordic Helsinki and Stockholm Stock Exchanges.

In 2007, the business had a net turnover of EUR1.77bn, operating profit (EBIT) of EUR21.7m. Currently it employs 16,000 people. TietoEnator Corporation was formed by the combination of Tieto Corporation in Finland and Enator AB in Sweden in 1999. Tieto was formed in 1968, while Enator AB was created in 1995.