(Reuters) – Canadian pension fund PSP Investments and its partners have agreed to buy the French operations of telecoms masts group TDF in a deal worth about 3.5 billion euros (US$4.40 billion), people familiar with the matter said.
The deal could be signed in the next few hours and an announcement is expected in the coming days, said the people, who declined to be identified because the talks are private. The sale process has gone through many twists and turns and already failed once on valuation.
The transaction will help TDF’s owners – private equity funds TPG, Charterhouse, Ardian and state bank Bpifrance – to repay almost all of the group’s 3.8 billion debt, the sources said.
“There is some light at the end of the tunnel, but I want to be cautious”, one of the sources said, referring to TDF’s owners laborious efforts to sell the business for more than a year.
Last year, TDF’s owners came close to a deal with Dering Capital but the fund, founded in 2011 by Ben Jenkins, former head of Blackstone‘s Hong Kong operations, failed to finance its 3.7 billion euro bid by a February 2014 deadline.
This led to PSP’s surprise comeback in a consortium with London-based Arcus Infrastructure Partners and later joined by Dutch pension fund APG and Canadian asset manager Brookfield Asset Management, the sources said. PSP had been an unsuccessful bidder in an earlier sale process.
The renewed appeal of TDF’s French business comes in the wake of Vivendi‘s sale of French mobile phone operator SFR to cable company Numericable. This has given investors a clearer idea of the value of the services TDF offers to television groups, radio and mobile operators.
PSP’s consortium will finance the deal with a 1.4 billion euro debt package equating 3.6-3.8 times TDF French arm’s core profit. This is down from the 2 billion figure previously considered to help to secure an investment grade rating, two lending sources close to the deal said.
BNP Paribas, Credit Agricole, Societe Generale, Lloyds and Royal Bank of Scotland are expected to provide the financing, the same people said. Banks may be required to hold the loans and postpone syndication to other lenders, until the underlying acquisition closes.
TDF, TPG, Bpifrance and Charterhouse declined to comment while Ardian and PSP could not immediately be reached for comment.
Morgan Stanley has advised PSP Investments on the deal while Rothschild and Goldman Sachs has worked with TDF’s owners.
By Sophie Sassard and Matthieu Protard
(Additional reporting by Freya Berry, Claire Ruckin in London and Gwenaelle Barzic in Paris. Editing by Jane Merriman)
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