Swiss telephone operator Swisscom’s bid for a majority stake in Czech company Cesky Telecom has failed.This content was published on April 6, 2005 - 17:56
The Czech cabinet approved the sale on Wednesday to Spain’s Telefonica, the highest bidder, which put €2.7 billion (SFr4.19 billion) on the table.
Swisscom spokesman Sepp Huber said the company regretted the Czech government’s decision.
Switzerland’s leading telecommunications group submitted its bid last week to the Czech Republic’s National Property Fund. Its offer amounted to Kc481.50 (SFr24.95) per share, or €2.64 billion.
The steering committee overseeing the sale, however, recommended that the government accept Telefonica’s bid, worth Kc502 per share, an offer about 25 per cent more than the closing price before bids were submitted.
On March 31, Swisscom all but conceded that it was out of the running when it said it would not increase its offer. "The price offered... is the maximum justifiable purchase price from the standpoint of Swisscom shareholders," the company said in a statement.
Earlier last month, Swisscom CEO Jens Alder said the Cesky deal would be a way of adding long-term value to the company. At the weekend, he told the NZZ am Sonntag newspaper that the Czech government could still consider Swisscom’s offer more attractive.
But the Czech cabinet unanimously followed the recommendation from the property fund.
Finance minister Bohuslav Sobotka said in Prague that all 18 ministers approved the deal, adding that he expected funds for the transaction to be paid around mid-year.
Telefonica outbid one other rival, Belgium’s Belgacom. An offer from a consortium backed by France Telecom was rejected last week.
Swisscom’s recent attempts at mergers and acquisitions abroad have not enjoyed much success.
A year ago, it sold off the German mobile phone services provider, debitel, at a loss of SFr2 billion. It also called off merger talks with Austria Telecom in August 2004, although according to Huber they could be relaunched.
But perhaps more surprisingly, it sold off an indirect stake it held in Cesky Telecom at the end of 2003.
Telsource NV, a Netherlands-based joint venture between KPN and Swisscom held 27 per cent of the Czech company’s shares. The sale earned the Swiss operator SFr500 million, plus another SFr120 million in Cesky profits.
But reports at the time said Swisscom and its partner lost the equivalent of $190 million (SFr229 million) on their investment.
swissinfo with agencies
Swisscom offered around Kc79.2 billion for a 51.1 per cent stake in Cesky Telecom.
Belgacom only put Kc67.5 billion on the table.
Telefonica made the the highest bid in the auction, offering Kc82.62 billion.
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