(Reuters) — TDC A/S, the private equity-backed Danish telephone company, is close to a deal to sell Swiss unit Sunrise to buyout firm CVC Capital Partners CVC.UL, six people familiar with the matter said on Thursday.
The deal will place an enterprise value on Sunrise of about 3.3 billion Swiss francs ($3.3 billion), four of the people said, making it one of the year’s largest leveraged buyouts. A deal is likely to be announced on Friday, some of the people added.
A sale would give CVC, a British private equity firm, control of Switzerland’s second-biggest telecommunications company and clear the way for TDC’s owners to accelerate long-held plans to refloat the company.
TDC dropped a plan to sell Sunrise to France Telecom’s (FTE.PA: Quote, Profile, Research, Stock Buzz) Orange earlier this year, after competition regulators in Switzerland blocked the merger of the two units. That set back plans by TDC’s owners to relist more of the company, which they took control of in 2006.
TDC’s main owners, with nearly 88 percent of the stock, are a group of five private equity firms: Apax Partners, Blackstone Group (BX.N: Quote, Profile, Research, Stock Buzz), Kohlberg Kravis Roberts (KKR.N: Quote, Profile, Research, Stock Buzz), Permira Advisers PERM.UL and Providence Equity Partners.
The deal is about 70 percent funded by debt, and 30 percent by equity, one of the people said — making it more leveraged than many buyouts since the credit crisis.
The debt, put together by BNP Paribas, Deutsche Bank and UBS, is split between longer-term loans and bridge loans that will be refinanced with high-yield bonds, two of the people added.
CVC, TDC and the buyout consortium declined to comment about the deal, which was first reported by Bloomberg.
“We have no information on a takeover,” said a Sunrise spokeswoman. “We do not comment on rumors.”
STRING OF DEALS
With 2.85 million customers, the company trails Swisscom AG (SCMN.VX: Quote, Profile, Research, Stock Buzz), which boasts 5.7 million mobile customers and 1.8 million broadband connections, but is far ahead of former suitor Orange Switzerland, which has 1.56 million customers.
Swisscom shares edged 0.2 percent lower to close at 393.60 Swiss francs.
In June it named a new chief executive, Oliver Steil, who was formerly CEO of German mobile phone company debitel.
Sunrise made first-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) of 131 million Swiss francs, up 13.9 percent from the same period a year earlier, on revenue of 495 million Swiss francs.
If the deal goes through, it would be this year’s biggest takeover of a European telephone company, Thomson Reuters data shows. Global mergers and acquisitions in telecoms total more than $122 billion this year, but the biggest deals have targeted South America, the United States, Africa and Australia.
This is the third big deal for CVC in as many months, after it struck two deals to take significant minority stakes in other companies.
In June it took a 630 million pound ($983 million) stake in Blackstone’s theme-park group Merlin Entertainments, and in August it acquired a 1.7 billion euro ($2.2 billion) stake in Spanish toll-road operator Abertis (ABE.MC: Quote, Profile, Research, Stock Buzz) from building company ACS (ACS.MC: Quote, Profile, Research, Stock Buzz).