Shares of TDC declined the most in more than six months in Copenhagen as NTC Holding GP & Cie. SCA, the consortium of buyout firms, sold about 128 million shares at 43.40 Danish kroner in a sale arranged by Morgan Stanley (MS), said the people, who declined to be identified because the information is private. The firms sold about 15 percent of TDC, cutting their stake to about 43.3 percent.
TDC’s owners are luring investors with high dividends as revenue stagnates. The Copenhagen-based firm will pay a dividend of 2.17 kroner per share next month, the company said this month, bringing the total payment for last year to 4.35 kroner. The Danish company’s annual dividend amounts to about 10 percent of its current share price, more than twice the so-called dividend yield of the Stoxx 600 Europe Index.
TDC fell as much as 5.4 percent, the sharpest drop since Aug. 5, and was down 4.49 percent to 43.17 kroner at 10:12 a.m. That pared the market value of the phone company, Denmark’s largest, to 35.6 billion kroner. The final sale price was 4 percent below TDC’s closing price of 45.20 kroner yesterday.
While the discount on the shares was “on the low side,” the dividend is “attractive,” Danske Bank analysts Poul Ernst Jessen and Erik Strandin Pers wrote in a report today.
The buyout firms, including Apax Partners LLP, Blackstone Group LP (BX), KKR & Co., Permira Advisers LLP and Providence Equity Partners Inc., had weighed whether to trim stakes, people familiar with the situation said last week, allowing them to return funds as European markets rebound.
“Capital is starting to flow,” said Peter Sorrentino, a senior fund manager who helps oversee $14.5 billion at Huntington Asset Advisors in Cincinnati. “People are starting to feel better about the economy holding together.”
Officials at Blackstone, Providence, KKR, Permira and Apax declined to comment. Before the share sale, the five firms owned about 59 percent of Copenhagen-based TDC after taking the telecommunications provider private in 2006 in what was then Europe’s largest leveraged buyout.
Last week, TDC reported fourth-quarter earnings that fell short of analysts’ projections, with profit from continuing operations rising to 704 million kroner. TDC has chosen to improve its services rather than match promotions as competitors load more bandwidth into their service offerings, Chief Executive Officer Henrik Poulsen said in an interview then.
TDC said Feb. 3 it expects 2012 revenue to be about 26 billion kroner, which would be the fourth straight year that sales have hovered around that level, according to data compiled by Bloomberg.
TDC said in a statement yesterday that it’s suspending a share buyback program for as much as 750 million kroner, which had been announced Feb. 3. It intends to restart the program once the block sale has been completed.
The rally in European stock markets may make it more attractive for buyout firms to exit their stakes, with the benchmark Stoxx Europe 600 Index rising more than 22 percent since late September through yesterday.
UniCredit SpA’s $9.9 billion rights offer is leading Europe’s stock sales to the best start of the year since 2007. European companies raised a total of $14.3 billion selling shares in the first five weeks, 16 percent more than the year- ago period and the most in five years, Bloomberg data show.
Additional share sales have surged recently, led by the $1.7 billion stock offering in January from Repsol YPF SA (REP), Spain’s biggest oil company. Madrid-based Repsol sold the shares to pursue an exploration drive. Abertis Infraestructuras SA, Spain’s biggest toll-road operator, sold part of its stake in Paris-based satellite company Eutelsat Communications SA for about $1.2 billion.
Buyout funds, which are currently seeking $175 billion from investors worldwide, managed to raise $21.4 billion last quarter, a rebound of 34 percent from the previous quarter and up 46 percent from the fourth quarter of 2010, according to data from the London-based research firm Preqin.