Bredband2 makes buy-out offer for A3 to create operator with 15% of Sweden's fibre connections

Swedish data communication and security services provider Bredband2 said it has issued a public buy-out offer to shareholders in telecommunications operator A3. The offer has been accepted by holders of nearly 72 percent of shares. The merged company with approximately 450,000 fibre connections and a 15 percent market share would be led by Bredband2 CEO Daniel Krook and there is likely to be some staffing overlap.

The offer is subject to a 90 percent take-up threshold, to a Bredband2 EGM on 16 October passing a motion to issue new shares to support the deal, and to customary regulatory approvals. However, A3 said Bredband2 has reserved the right to execute the buy-out even if the 90 percent threshold is not reached.

The bid has been accepted by A3 board member Mark Hauschildt, who holds circa 46.7 percent of shares and voting rights in A3, and by board member Johan Asberg with 8.4 percent. They have withdrawn from dealing with the offer and will leave this to an independent bid committee within the board.

This committee said the offer has been accepted by seven major shareholders, together owning around 71.69 percent of shares and votes. Centauri Tech Ventures has advised the committee that Bredband2’s offer is a reasonable one. The Schjodt legal bureau is advising A3.

Bredband 2 is offering eight new Bredband2 shares and SEK 6 in cash for every share in A3, worth approximately SEK 18.92 per A3 A share, or a total of over SEK 621.66 million.

This is a premium of approximately 37.6 percent over the SEK 13.75 closing price per A3 share on Nasdaq Stockholm on 11 September 2020. It is also 35.5 percent more than the volume-weighted average price for the last 30 days, and about 37.9 percent more than the average over the past 90 days. The acceptance period is expected to run from 27 October to 17 November 2020 inclusive, with possible extensions.

A3 said it is one of Sweden’s largest ISPs and telecoms service offers, with more than 240,000 private and business customers. Services include broadband access, mobile telephony, IP telephony, fixed line telephony, IT services and cloud services. Bredband2 said it has one of Sweden’s largest networks, providing stable fibre connections to more than 240,000 customers nationwide, again both retail and corporate ones.

A3 said the offer should be seen against the background of its current position and opportunities to come, as well as the risks linked to future development and strategy. There are advantages to scale in the telecommunications sector and the merged company will have a larger customer base to absorb overhead costs and new investments.

The new coperator would have approximately 450,000 fibre connections and approximately 15 percent of the market. A3 largely services northern Sweden and Bredband2 southern Sweden. The two firms already use many of the same suppliers.

Current Bredband2 CEO Daniel Krook would lead the merged group and will gather an appropriate management team .There will be some personnel overlap. No decisions have been made about either company’s staff or their employment conditions but changes are expected. The new company will have offices in Stockholm, Umea, Skelleftea, Sundsvall and Malmo.