Belgian cable company Telenet remains opposed to a takeover bid from majority owner Liberty Global (LGI), with independent directors saying the offer price of €35 ($47) per share is too low.
In a statement quoted by Dow Jones Newswires, Telenet’s directors said “the current offer does not sufficiently reflect the value of the company and its prospects”. The statement went on to say the directors “would consider recommending an offer from LGI if it were made at a price between €39 and €40”.
LGI (Amsterdam, Netherlands), which already owns 50.2% of Telenet (Mechelen, Belgium), made a formal €35-per-share offer for the rest of the business earlier this week, having originally proposed a takeover at that price in September.
Telenet, however, has rebuffed the approach, believing shares in the company are worth at least €37 and possibly as much as €42.
That valuation range has been derided by LGI, which says Telenet’s methodologies “do not incorporate DCF [discounted cash flow] valuations based on brokers’ consensus financial and do not appropriately incorporate the risk of aggressive mobile projections with the assumed weighted cost of capital”.
In further justifying its criticisms, LGI says it has “serious reservations regarding the financial projections completed by Telenet management on October 5”.
The chief issue appears to be some lofty expectations of growth in the mobile-phone market.
According to LGI, the forecasts would require Telenet to increase its increase market share from just 1% in 2012 to about 16% in 2018, capturing “the vast majority of mobile gross adds in Telenet’s footprint in 2018.
LGI maintains that its own valuation represents a considerable premium to Telenet’s closing share price on September 19, before the acquisition was mooted.
It adds that its offer price also values the company higher than peers like Ziggo (Utrecht, Netherlands), Kabel Deutschland (Unterfoehring, Germany) and Virgin Media (Hook, UK).
According to The Wall Street Journal, there is a risk the deal becomes a hostile takeover if the two sides cannot reach an agreement soon.