The independent committee of the Board of Directors of Millicom
(Tigo) unanimously recommends that shareholders and SDR holders not
accept the public cash offers made by Atlas Luxco S.à r.l. and
gives an update on Millicom’s long-range plan
The independent committee of the Board
of Directors of Millicom (Tigo) unanimously recommends that
shareholders and SDR holders not accept the public cash offers made
by Atlas Luxco S.à r.l. and gives an update on Millicom’s
long-range plan
(issued pursuant to the Swedish
Takeover Rules)
For the reasons further discussed in
Section 3 below, the independent committee is of the opinion that
the public cash takeover offers made by Atlas Luxco S.à r.l.
significantly undervalue Millicom and recommends that shareholders
and SDR-holders not accept the offers.
In support of its recommendation and
to provide shareholders and SDR holders with further information in
view of their decision on whether to accept the offers, the
independent committee gives an update on Millicom’s long-range plan
as further discussed in Section 3.2 below. The update includes the
independent committee’s expectations of Equity free
cash1 flow and Leverage1 for 2024 through
2026.
- Background
Luxembourg, 15 July, 2024 –
This statement is made by the independent committee2
(the “Independent Committee”) of the board of
directors of Millicom International Cellular S.A.
(“Millicom”) pursuant to section II.19 of the
Takeover Rules for Nasdaq Stockholm and Nordic Growth Market NGM
(the “Takeover Rules”).
On July 1, 2024, Atlas Luxco S.à r.l.
(“Atlas”), a subsidiary of Atlas Investissement
S.A.S., announced separate but concurrent public offers in Sweden
(the “Swedish Offer”) and the United States (the
“US Offer”, and together with the Swedish Offer,
the “Offers”) to the shareholders in Millicom to
tender all of their outstanding common shares in Millicom (the
“Common Shares”), including Swedish Depositary
Receipts representing Common Shares (with each Swedish Depositary
Receipt representing one Common Share) (the
“SDRs,” and together with the Common Shares, the
“Shares”) to Atlas, for USD 24.00 per Common Share
and USD 24.00 per SDR (the “Offer Price”). The
offer price of USD 24.00 per SDR currently corresponds to SEK
252.8.3 The Offers value the total number of outstanding
Shares in Millicom at approximately USD 4.1 billion (currently
corresponding to SEK 43.2 billion). Holders of Common Shares and
SDRs are collectively referred to below as
“Shareholders”.
The Offer Price represents:
- A negative premium of -1.4 per cent compared to the closing SDR
price on Nasdaq Stockholm of SEK 258.0 on June 28, 2024, the last
full trading day prior to the announcement of the Offers (converted
at a USD/SEK exchange rate of 10.60);
- A limited premium of 2.4 per cent compared to the closing SDR
price on Nasdaq Stockholm of SEK 251.6 on May 22, 2024, the last
full trading day prior to Atlas issuing a press release announcing
that it was exploring a potential all cash tender offer for the
Shares (converted at an assumed USD/SEK exchange rate of
10.73);
- A negative premium of -0.2 per cent compared to the
volume-weighted average SDR price on Nasdaq Stockholm of SEK 252.7,
for the 30-day trading period ending on June 28, 2024, the last
full trading day prior to the announcement of the Offers (converted
at an observed USD/SEK exchange rate of 10.51);
- A negative premium of -2.2 per cent compared to the closing
share price on Nasdaq US of USD 24.55 on June 28, 2024, the last
full trading day prior to the announcement of the Offers;
- A limited premium of 1.8 per cent compared to the closing share
price on Nasdaq US of USD 23.58 on May 22, 2024, the last full
trading day prior to Atlas issuing a press release announcing that
it was exploring a potential all cash tender offer for the Shares;
and
- A negative premium of -0.3 per cent compared to the
volume-weighted average share price on Nasdaq US of USD 24.07, for
the 30-day trading period ending on June 28, 2024, the last full
trading day prior to the announcement of the Offers.
According to the offer document for the Offers
(the “Offer to Purchase”), which was made public
by Atlas on July 1, 2024, the initial acceptance period for the
Offers commenced on July 1, 2024, and ends on August 16, 2024 (such
period, including any extension, the “Offer
Period”). The estimated date of settlement is on or around
August 29, 2024. Atlas has reserved the right to extend the Offer
Period and to postpone the settlement date.
The completion of the Offers is subject to the
following conditions:
1. the Offers being accepted to such extent that
Atlas becomes the owner of Shares representing ninety-five (95) per
cent or more of the Shares, excluding Shares held in treasury by
Millicom;
2. no other party announcing an offer to acquire
Shares on terms that are more favorable to the Shareholders than
the Offers;
3. with respect to the Offers and completion of
the acquisition of Millicom, receipt of all necessary regulatory,
governmental or similar clearances, approvals, decisions and other
actions from authorities or similar, including from competition
authorities, being obtained, in each case on terms which, in
Atlas’s opinion, are acceptable;
4. neither the Offers nor the acquisition of
Millicom being rendered wholly or partially impossible or
significantly impeded as a result of legislation or other
regulation, any decision of a court or public authority, or any
similar circumstance;
5. no circumstances having occurred which could
have a material adverse effect or could reasonably be expected to
have a material adverse effect on Millicom’s financial position or
operations, including Millicom’s sales, results, liquidity, equity
ratio, equity or assets;
6. no information made public by Millicom, or
otherwise made available to Atlas by Millicom, being inaccurate,
incomplete or misleading, and Millicom having made public all
information which should have been made public; and
7. Millicom not taking any action that is likely
to impair the prerequisites for making or completing the
Offers.
Atlas has reserved the right to withdraw the
Offers in the event that it is clear that any of the above
conditions are not satisfied or cannot be satisfied. However, with
regard to conditions 2 – 7 above, the Offers may only be
withdrawn where the non-satisfaction of such condition is of
material importance to Atlas’s acquisition of Millicom or if
otherwise approved by the Swedish Securities Council
(Sw. Aktiemarknadsnämnden).
Atlas has reserved the right to waive, in whole
or in part, one, several or all of the conditions to the completion
of the Offers set forth above, including, with respect to condition
1 above, to complete the Offers at a lower level of acceptance.
Atlas, through affiliates, is today the largest
shareholder of Millicom, and controls approx. 29.03 per cent of the
share capital and the total number of votes in Millicom.
For further information about the Offers, please
refer to www.atlas-investissement.com/en/offers.
Following the Offers being made, Nordea Bank
Abp, filial i Sverige, Corporate Finance
(“Nordea”) was engaged to provide a fairness
opinion to the Independent Committee in accordance with the
Takeover Rules. Nordea provided an opinion to the Independent
Committee dated July 12, 2024 stating that, as of July 12, 2024,
and based upon and subject to the matters considered, the
procedures followed, the assumptions made and various limitations
of and qualifications to the review undertaken set forth in such
opinion, the Offer Price was not fair, from a financial point of
view, to the Shareholders (other than Atlas and its affiliates)
(the “Opinion”). The Opinion is attached to this
statement. Nordea provided the Opinion solely for the information
and assistance of the Independent Committee in connection with its
consideration of the Offers. Nordea’s Opinion does not constitute a
recommendation to any Shareholder as to whether or not the
Shareholders should accept the Offers or any other matter. In
exchange for providing the Opinion, Nordea will receive a fixed fee
which became payable upon delivery of the Opinion and is payable
whether or not the Offers are completed and is not contingent upon
the Offer Price or the level of acceptance of the Offers by the
Shareholders. Nordea is considered to be independent as defined in
the Takeover Rules.
Goldman Sachs International and Morgan Stanley
& Co. International plc are acting as financial advisors to
Millicom.
Davis Polk & Wardwell LLP, Nord Advokater
and Advokatfirman Lindahl and Hogan Lovells (Luxembourg) LLP are
acting as legal advisors to the Independent Committee and Millicom
in relation to the Offers.
- The process leading
to the Offers
On May 23, 2024, Atlas sent the Board a
non-binding indication of interest related to a potential all-cash
offer for all of the Shares (including Shares represented by SDRs)
that Atlas and its affiliates did not then currently own, for a
purchase price of USD 24.00 per Common Share (and the SEK
equivalent per SDR).
On June 12, 2024, Atlas sent the Board a second
letter confirming, among other things, its intent to move forward
with a “recommended” voluntary all-cash offer at the same price
indicated in the first letter.
On June 18, 2024, the Independent Committee sent
a letter to Atlas stating that Atlas’s proposed offer price
significantly undervalued Millicom and further informed Atlas that,
given that Atlas had neither raised its intended offer price nor
indicated that it might do so despite certain limited due diligence
materials being made available and calls held with Millicom’s
management (which were limited did not contain inside information),
the Independent Committee did not see a basis to provide any
further diligence access to Atlas and its affiliates at that time.
The letter also described additional information the Independent
Committee would require should Atlas wish to submit a revised
proposal for the Independent Committee’s consideration.
On June 27, 2024, the Independent Committee
issued a press release (the “June 27 Press
Release”) announcing (i) that it anticipated Atlas would
launch an all-cash tender offer in the near term at a price of USD
24.00 per Common Share (and the SEK equivalent per SDR),
notwithstanding the fact that the Independent Committee had
previously informed Atlas that the Independent Committee
unanimously believed that such an offer price would significantly
undervalue Millicom, and (ii) in light of the anticipated tender
offer, and to support Shareholders in evaluating such tender offer,
based on Millicom’s preliminary review of financial performance for
the second quarter of 2024 (which then continued, and still
continues, to be subject to review by Millicom’s management and
auditor), the Independent Committee’s expectations as to certain
financial performance of Millicom.
On July 1, 2024, Atlas launched the Offers by
issuing a press release and subsequently on the same day obtained
approval of the Offer to Purchase from the Swedish Financial
Supervisory Authority (Sw. Finansinspektionen). The Offer
Period commenced on the same day.
On July 15, 2024, the Independent Committee
unanimously determined that the Offers significantly undervalue
Millicom and are not in the best interests of the Shareholders and
issued this recommendation statement.
- The Independent Committee’s statement on the
Offers
IN SUMMARY, FOR THE REASONS SET FORTH
BELOW, THE INDEPENDENT COMMITTEE UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS NOT ACCEPT THE OFFERS AND NOT TENDER THEIR SHARES
PURSUANT TO THE OFFERS.
3.1 Reasons for recommending that Shareholders
not accept the Offers
The recommendation of the Independent Committee
to not accept the Offers is, inter alia, based on the
following reasons:
- the Offer
Price significantly undervalues Millicom, including based on the
following considerations:
- the Offer
Price does not adequately take into account expectations based on
Millicom’s long-range plan that Millicom will generate Equity free
cash flow (as defined below) of USD 659 million, USD 701 million
and USD 833 million in 2024, 2025 and 2026, respectively (see
Section 3.2 below);
- the Offer
Price does not adequately take into account that, as previously
announced and based on results through mid-June 2024, Millicom’s
Equity free cash flow4 for full year 2024 is expected to
be above $600 million (with this expectation not including
Millicom’s prior receipt of $46 million of net proceeds from its
previously announced Colombia tower sale) and Millicom’s
Leverage4 is expected to end 2024 near the intermediate
term target of 2.5x;
- the Offer
Price is well below trading multiples for comparable listed
companies:
- while the
average 2024 enterprise value to operating cash flow multiple of
Millicom’s Trading Peers5 is 7.4x, the Offer Price
represents a 37.3% discount to the price per Share implied by
applying the same multiple to Millicom;6 and
- while the
average Equity free cash flow yield of Millicom’s Trading Peers is
10.5%, the Offer Price represents a 30.1% discount to the price per
Share implied by applying the same yield to
Millicom;6
- the Offer
Price represents a negative premium to the most recent closing
price of the Shares and the closing prices of the Shares on certain
other key dates:
-
- a negative premium of -1.4 per cent compared to the closing SDR
price on Nasdaq Stockholm of SEK 258.0 on June 28, 2024, the last
full trading day prior to the announcement of the Offers (converted
at a USD/SEK exchange rate of 10.60);
- a negative premium of -0.2 per cent compared to the volume
weighted average SDR price on Nasdaq Stockholm of SEK 252.7, for
the 30-day trading period ending on June 28, 2024, the last full
trading day prior to the announcement of the Offers (converted at
an observed USD/SEK exchange rate of 10.51);
- the
average control premia to undisturbed prices observed in all-cash
technology, media, and telecommunications transactions involving
targets that are considered to be large publicly listed companies
in the United States and Europe over the past 15 years range
between 17.4% and 46.4%, while the Offer Price represents a limited
premium of 2.4 per cent compared to the closing price of SEK 251.6
per SDR (converted at a USD/SEK exchange rate of 10.73) on May 22,
2024, the last full trading day prior to Atlas issuing a press
release announcing that it was exploring a potential all cash
tender offer for the Shares;
- the
Offers do not adequately consider the potential value of ongoing
and potential strategic transactions and alternatives, including
that Millicom may evaluate whether to distribute dividends and/or
implement a share repurchase program or otherwise return capital to
its Shareholders (i.e., given the Long-Range Plan Expectations
discussed in Section 3.2 below, and in particular Millicom’s
expected anticipated cash flow generation, Millicom may, between
2024 and 2026, have excess cash sufficient to distribute dividends
and/or implement a share repurchase program); and
- Atlas
states in the Offer to Purchase that it reasonably believes that
the Offer Price “is fair to [u]naffiliated [s]hareholders seeking
immediate liquidity”, while the Independent Committee evaluated and
bases its recommendation on whether the Offer Price was fair to all
of Millicom’s unaffiliated shareholders.
-
- a
negative premium of -2.3% to the closing price of SEK 258.8 per SDR
on July 12, 2024, the last full trading day prior to this release
(converted at a USD/SEK exchange rate of 10.53);
The Independent Committee believes that, taken
as a whole, including the overall assessment conducted by the
Independent Committee as summarized below, the foregoing reasons
support the Independent Committee’s determination that the Offers
are not in the best interests of the Shareholders.
3.2 Update on Millicom’s long-range plan
In evaluating the Offers and in the course of
its deliberations leading to the determination to recommend that
Shareholders not accept the Offers and not
tender their Shares pursuant to the Offers, the
Independent Committee discussed with Millicom’s management its most
updated long-range plan for Millicom (the “Long-Range
Plan”), including Millicom’s anticipated cash flow
generation contemplated thereby, and which was based, in part, on
the preliminary review and report by Millicom’s management of
Millicom’s financial performance for the second quarter of 2024
(the “2024Q2 Preliminary Financial Review”), each
of which continues to be subject to review by Millicom’s management
and auditor.
Accordingly, in connection with the Offers, and
to support the Shareholders in evaluating the Offers and the
Independent Committee’s recommendation, the Independent Committee
observes that the Long-Range Plan presently indicates the following
expectations for Millicom’s 2024 through 2026 fiscal years (the
“Long-Range Plan Expectations”):
($ in millions) |
2024E |
2025E |
2026E |
|
Equity free cash flow7 |
659 |
701 |
833 |
|
Leverage8 |
2.4x |
1.9x |
1.5x |
|
The Long-Range Plan Expectations are underpinned
by, among other things, recent cash flow outperformance (as
announced in the June 27 Press Release) and expected near-term cash
flow improvement. While Millicom has gone through a period of
constrained cash flows over the last several years, given
meaningful investments made by Millicom in its business activities,
including with respect to spectrum, capital expenditures and recent
internal restructurings, Millicom’s management believes this
investment period is nearing conclusion and expects Millicom’s cash
flow generation to significantly increase over the coming years as
reflected in the Long-Range Plan. However, the Long-Range Plan
Expectations assume that no capital allocation activities or
transactions, including distributions of dividends, share
repurchases, strategic transactions or similar activities or
transactions, have been undertaken by Millicom in the relevant
period(s).
Accordingly, taking into account risk-adjusted
value, potential benefits, risks and uncertainties that may
ultimately impact the accuracy of the Long-Range Plan, and subject
to further changes in Millicom’s business, assets, liabilities,
financial condition, results of operations, management, competitive
position, prospects and operating plans, as well as industry,
economic and stock and credit market conditions, the Independent
Committee believes that the intrinsic valuation of Millicom implied
by the Long-Range Plan is more favorable to the Shareholders than
the valuation implied by the Offer Price.
Note that Millicom’s actual future financial
results may differ materially from those expressed in the
Long-Range Plan due to numerous factors, including many that are
beyond Millicom’s ability to control or predict. The above
information about the Long-Range Plan should be read in light of
the important disclosures set forth below under “Cautionary
Statement”.
3.3 Overall assessment; method
In evaluating the Offers, the Independent
Committee conducted an overall assessment and reviewed, considered
and evaluated a significant amount of information and factors,
including potential benefits, detriments and implications of the
Offers to Millicom and the Shareholders that the Independent
Committee considered relevant for its evaluation of the Offers.
These factors included, but were not limited to, the current and
historic market prices of the Shares, prevailing market conditions
and opportunities and challenges in each market in which Millicom
operates, Millicom’s strategic options and Millicom’s expected
future development and financial performance, as well as
opportunities and risks related to the foregoing.
Further, and without limitation, the Independent
Committee, in consultation with Millicom’s management, Millicom’s
financial advisors and Nordea, analyzed the Offers using certain
methods typically used for evaluating tender offers for publicly
listed companies, including the implied valuation of Millicom in
the Offers relative to comparable publicly listed companies, the
Offer Price relative to the price per share paid in comparable
transactions, premia that were applicable in previous tender offers
for comparable publicly listed companies, the Independent
Committee’s belief of the stock market’s expectations in respect of
Millicom and the Independent Committee’s view of Millicom’s
long-term value, including based on Millicom’s long-range plan and
expected future cash flows.
The Independent Committee has also considered
the Opinion from Nordea stating that, as of July 12, 2024, and
based upon and subject to the matters considered, the procedures
followed, the assumptions made and various limitations of and
qualifications to the review undertaken set forth in the Opinion,
the Offer Price was not fair, from a financial point of view, for
the Shareholders (other than Atlas and its affiliates). The full
text of the Opinion of Nordea, dated July 12, 2024, which sets
forth the matters considered, the procedures followed, the
assumptions made and various limitations of and qualifications to
the review undertaken in connection with such Opinion, is attached
to this statement. For further details on Nordea’s Opinion, please
see section 1 of this statement.
The foregoing discussion of the Independent
Committee’s reasons for its recommendation that Shareholders
not accept the Offers and not
tender their Shares pursuant to the Offers is not intended
to be exhaustive, but the Independent Committee believes it
includes all the material information and factors considered by the
Independent Committee. In view of the wide variety of factors
considered in connection with its evaluation of the Offers and the
complexity of these matters, the Independent Committee did not
consider it practicable to, and did not attempt to, quantify or
otherwise assign relative or specific weight or values to any of
these factors. Rather, the Independent Committee based its
unanimous recommendation on an overall analysis and on the totality
of the information presented to and factors considered by it. In
addition, in considering the factors described above, individual
members of the Independent Committee may have given different
weights to different factors.
The Independent Committee also notes that:
- if Atlas
waives the “95% minimum tender condition” applicable to the Offers
and the Offers are accepted only to such extent that Atlas becomes
the owner of Shares representing at least 33 1/3% of Millicom’s
outstanding Shares (being the “mandatory bid threshold” under
Luxembourg law), Atlas and its affiliates could continue to
purchase Shares in the open market without having paid a control
premium to Shareholders who have tendered their Shares in the
Offers or ever paying a control premium in the future; and
- if Atlas
acquires additional Shares in the Offers and increases its
ownership of Millicom and exercises its ability to waive the “95%
minimum tender condition” applicable to the Offers, liquidity of
the Shares may be reduced, which could have an adverse effect on
Millicom’s stock price and could jeopardize the existence of an
active trading market for the Shares.
IN LIGHT OF THE FOREGOING, THE
INDEPENDENT COMMITTEE UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS NOT
ACCEPT THE OFFERS AND NOT TENDER THEIR COMMON SHARES OR SDRs
PURSUANT TO THE OFFERS.
However, the Independent Committee considers it
to be beneficial for Millicom that Atlas, as stated in the offer
announcement, intends to continue to support Millicom in the
execution of its strategic plan.
- Impact on Millicom
and its employees
In accordance with the Takeover Rules, the
Independent Committee is required, on the basis of Atlas´s
statement in the press release announcing the Offers and the
related Offer to Purchase, to present its opinion regarding the
impact that the implementation of the Offers will have on Millicom,
particularly on terms of employment, as well as the Independent
Committee’s opinion regarding Atlas’s strategic plans for Millicom
and the effect such plans are anticipated to have on employment and
on the locations where Millicom operates.
In its offer announcement press release and the
Offer to Purchase, Atlas, among other things, stated that it did
not, at that point in time, anticipate that Millicom’s business
will be materially affected as a result of the Offers. Atlas also
stated that it then currently had no plans, proposals or
negotiations that relate to or would result in any changes
concerning Millicom’s management or employees, or to change any
material term of the employment contract of any executive officer
or other employee, or any other material change in Millicom’s
corporate structure, business or with regard to Millicom’s
operational sites. Atlas did, however, also note that it will
conduct a detailed review of such matters following completion of
the Offers and intends to thereafter leverage the long-term
knowledge and experience of Atlas and its affiliates in the
telecoms sector across numerous jurisdictions to explore potential
synergies, focus on long-term business goals and pursue any
potential strategic transactions and acquisitions that may arise.
Atlas has stated that possible changes could include changes in
Millicom’s business, corporate structure, organizational documents,
capitalization, management, business development opportunities,
indebtedness, dividend policy or to the Board of Directors of
Millicom.
Atlas has further stated that, if the conditions
for completion of the Offers are satisfied and the Offers are
successful, following the completion of the Offers and to the
extent legally permitted by applicable law, Atlas currently intends
to delist the shares from Nasdaq US and the SDRs from Nasdaq
Stockholm.
The Independent Committee assumes that this
description is accurate, has no reason to adopt a different opinion
and considered this when issuing this recommendation.
In accordance with the Luxembourg Law of 19 May
2006 transposing Directive 2004/25/EC of the European Parliament
and of the Council of 21 April 2004 on takeover bids, applicable,
inter alia, to matters relating to the information to be
provided to the employees of Millicom, when the Offers were made
public, the Board of Directors / Independent Committee of Millicom
communicated the Offers to Millicom’s employees. Millicom’s
employees shall be and have been involved by the Independent
Committee in its analysis which has led to this statement on the
Offers. The Independent Committee has informed and required the
advice of Millicom’s employees, in particular regarding the effects
of the Offers on all of Millicom’s interests and specifically
regarding employment.
Regulatory Statement; governing
law
Certain information contained in this release
was prior to this release inside information and is information
that Millicom is obliged to make public pursuant to the EU Market
Abuse Regulation. This information was submitted for publication,
through the agency of the contact person set out below, at 3:20 CET
on 15 July, 2024.
This statement shall be governed by and
construed in accordance with substantive Swedish law. Any dispute
arising out of or in connection with this statement shall be
settled exclusively by Swedish courts, and the District Court of
Stockholm shall be the court of first instance.
US Schedule 14D-9 statement
Substantially concurrently with the issuance of
this statement as a press release, Millicom is (i) filing a
Schedule 14D-9 with the US Securities and Exchange Commission, in
which the Independent Committee unanimously recommends that
Shareholders not accept the Offers and not
tender their Shares pursuant to the Offers and (ii)
issuing a press release summarizing such Schedule 14D-9 and such
recommendation.
Cautionary Statement
In connection with its review and evaluation of
the Offers, the Independent Committee considered (i) the 2024Q2
Preliminary Financial Review, which was the basis of the
expectations that Millicom’s Equity free cash flow for full year
2024 will be above $600 million, based on results through mid-June
2024 and taking into account potential risks that may impact
performance (with this expectation not including Millicom’s prior
receipt of $46 million of net proceeds from its previously
announced Colombia tower sale) and Millicom’s Leverage will end
2024 near the intermediate term target of 2.5x (collectively, the
“Preliminary 2024 Expectations”) and (ii) the
Long-Range Plan, which was the basis of the Long-Range Plan
Expectations. The 2024Q2 Preliminary Financial Review and the
Long-Range Plan are referred to collectively as the
“Expectation Details” and the Preliminary 2024
Expectations and the Long-Range Plan Expectations are referred to
collectively as the “Expectations”.
The Expectations included in this statement are
intended solely to provide the Shareholders access to certain of
the Independent Committee’s interpretations of the Expectation
Details that were made available to the Independent Committee,
Millicom’s financial advisors and Nordea. The Expectation Details
and the Expectations are not being included in this statement to
influence the decision of any Shareholders regarding whether to
tender Shares in the Offers or for any other purpose. The
Expectation Details on which the Expectations were based may
include projections that differ from publicly available analyst
estimates and projections and do not take into account any events
or circumstances after the date they were prepared, including the
announcement of the Offers.
The Expectation Details on which the
Expectations were based are necessarily based on numerous
variables, estimates, assumptions and judgments made by Millicom’s
management, based on information available at the time the
Expectation Details were developed, with respect to industry
performance and competition, general business, economic,
regulatory, market and financial conditions, other future events
and matters specific to Millicom’s business, all of which are
inherently uncertain, difficult to predict and many of which are
beyond Millicom’s control. There can be no assurances that the
Expectations will accurately reflect future trends or accurately
estimate Millicom’s future financial and operating performance.
Additionally, calculations of the Expectations
(and the underlying Expectation Details) assume that no capital
allocation activities or transactions, including distributions of
dividends, share repurchases, strategic transactions or similar
activities or transactions, have been undertaken by Millicom in the
relevant period(s).
The Expectation Details on which the
Expectations were based are also inherently based on assumptions as
to certain business decisions that are subject to change. Important
factors that may affect actual results and cause the Expectations
not to be achieved include, but are not limited to, risks and
uncertainties relating to Millicom’s business (including the
ability to achieve strategic goals, objectives and targets over the
applicable periods), industry performance and competition, general
business, economic, regulatory, market and financial conditions and
those risks and uncertainties detailed in Millicom’s public filings
with the SEC, including those set forth in Millicom’s annual report
on Form 20-F for the fiscal year ended December 31, 2023, filed
with the SEC on March 12, 2024, under the section entitled “Part I
— Item 3. Key Information — D. Risk Factors”. Accordingly, there
can be no assurance that the Expectations will be realized, and
actual results may vary materially from the Expectations. Modeling
and forecasting the future performance of a provider of fixed and
mobile telecommunications services is a highly speculative
endeavor.
The Expectations include certain financial
measures which are not IFRS measures. Such financial measures
should not be considered in isolation from, or as a substitute for,
financial information presented in accordance with IFRS. Millicom’s
calculations of these financial measures may differ from others in
its industry and are not necessarily comparable with information
presented under similar captions used by other companies.
The Expectation Details on which the
Expectations were based were the responsibility of Millicom’s
management. Neither Ernst & Young Société anonyme
(“EY”), Millicom’s independent registered public
accounting firm, nor any other auditing firm, has audited,
reviewed, examined, compiled or applied agreed-upon procedures with
respect to the Expectation Details and, accordingly, neither EY nor
any other auditing firm has expressed any opinion or any other form
of assurance with respect thereto.
The inclusion of the Expectations in this
statement should not be regarded as an indication that Millicom,
Millicom’s financial advisors, Nordea or any of their respective
affiliates, officers, directors, advisors or representatives
considered or consider the Expectations to be predictive of actual
future events, and the Expectations should not be relied on as
such. None of Millicom, Millicom’s financial advisors, Nordea nor
any of their respective affiliates, officers, directors, advisors
or representatives can give any assurance that actual results will
not differ materially from the Expectations.
None of Millicom, Millicom’s financial advisors,
Nordea or any of their respective affiliates, officers, directors,
advisors or representatives has made or makes any representation to
any Shareholder or other investor regarding the ultimate
performance of Millicom compared to the Expectations or that the
Expectations will be achieved.
In light of the foregoing factors and
the uncertainties inherent in the Expectations, the Shareholders
and other investors are cautioned not to place undue, if any,
reliance on the Expectations.
None of Millicom nor any of its affiliates,
officers, directors, advisors or other representatives undertakes
any obligation to update or otherwise revise or reconcile any
Expectations to reflect circumstances existing after the date the
Expectation Details were generated or the Expectations were formed
or to reflect the occurrence of subsequent or future events even in
the event that any or all of the assumptions underlying the
Expectations are shown to be in error. Millicom undertakes no
responsibility to make publicly available any update or other
revision to the Expectations except as required by law.
Use of Non-IFRS Terms
This statement contains financial measures that
are not prepared in accordance with IFRS. These measures are
referred to as “non-IFRS” measures, and they are not uniformly or
legally defined financial measures. Non-IFRS measures are not
substitutes for IFRS measures in assessing Millicom’s overall
operating performance. Because non-IFRS measures are not determined
in accordance with IFRS, and are susceptible to varying
calculations, non-IFRS measures may not be comparable to other
similarly titled measures presented by other companies.
Millicom does not reconcile its forward-looking
non-IFRS financial measures to the nearest equivalent IFRS measures
because such reconciliations are not available without unreasonable
efforts, including due to the difficulty in making accurate
forecasts and projections and/or certain information not being
ascertainable or accessible.
Non-IFRS measures are included in this statement
because they are used by Millicom’s management, and Millicom
believes they provide investors with additional background for the
analysis of certain information set forth in this statement.
Millicom’s management uses non-IFRS measures to make operating
decisions, as they facilitate additional internal comparisons of
Millicom’s performance to historical results, and provides them to
investors for additional insight into Millicom’s operating
performance.
Non-IFRS measures have limitations as analytical
tools. The non-IFRS measures used by Millicom may be calculated
differently from, and therefore may not be comparable to, similarly
titled measures used by other companies. In addition, non-IFRS
measures should not be considered in isolation as a substitute for,
or as superior to, financial measures calculated in accordance with
IFRS. Millicom’s financial results calculated in accordance with
IFRS and reconciliations to those financial statements should be
carefully evaluated.
-END-
For further information, please
contact:
Press: |
Investors: |
Sofia Corral, Director Corporate Communications
press@millicom.com |
Michel Morin, VP Investor Relations
investors@millicom.com |
About Millicom
Millicom (NASDAQ U.S.: TIGO, Nasdaq Stockholm:
TIGO_SDB) is a leading provider of fixed and mobile
telecommunications services in Latin America. Through our TIGO® and
Tigo Business® brands, we provide a wide range of digital services
and products, including TIGO Money for mobile financial services,
TIGO Sports for local entertainment, TIGO ONEtv for pay TV,
high-speed data, voice, and business-to-business solutions such as
cloud and security. As of March 31, 2024, Millicom, including its
Honduras Joint Venture, employed approximately 15,500 people, and
provided mobile and fiber-cable services through its digital
highways to more than 45 million customers, with a fiber-cable
footprint over 14 million homes passed. Founded in 1990, Millicom
International Cellular S.A. is headquartered in Luxembourg.
Independent Committee of the Board of Directors
Millicom International Cellular S.A.
2, Rue du Fort Bourbon
L-1249 Luxembourg
Grand Duchy of Luxembourg
Stockholm, 12 July 2024
The Independent Committee (the
“Independent Committee”) of the Board of Directors
of Millicom International Cellular S.A.
(“Millicom”) is evaluating the separate but
concurrent public offers in Sweden (the “Swedish
Offer”) and the United States (the “US
Offer”) made by Atlas Luxco S.à r.l. (the
“Bidder”) to purchase all the outstanding common
shares with a par value of USD 1.50 per share (“Common
Shares”) and Swedish Depository Receipts representing
Common Shares (“SDRs”) of Millicom that are not
already owned by the Bidder or its affiliates for USD 24.00 in cash
per Common Share and per SDR (the “Offer Price”).
The full terms and conditions of the Swedish Offer and the US Offer
(together, the “Offers”) are set out in the offer
to purchase (the “Offer to Purchase”) (and, for
the US Offer, the accompanying letter of transmittal (together with
the Offer to Purchase, the “Offer Documents”))
dated 1 July 2024 and filed by the Bidder and certain of its
affiliates with the Securities and Exchange Commission. According
to the terms of the Offers, the Offer Price per SDR in SEK that
will be paid to the holders of SDRs will be set based on the
USD/SEK exchange rate as close to the settlement date as the Bidder
is able to achieve.
Nordea Bank Abp, filial i Sverige, Corporate
Finance (“Nordea”) has been requested by the
Independent Committee to provide an opinion in accordance with the
Swedish Takeover Rules for Nasdaq Stockholm and Nordic Growth
Market NGM (the “Swedish Takeover Rules”) as to
whether the Offer Price is fair, from a financial point of view,
for the holders of Common Shares and SDRs (other than the Bidder
and its affiliates).
As a basis for this opinion, Nordea has
considered:
- certain historical business and financial information relating
to Millicom, including annual reports and interim reports;
- certain financial projections for Millicom prepared by the
management of Millicom and approved for our use by the Independent
Committee;
- certain information from the management of Millicom regarding
Millicom’s business, operations and prospects, including historical
development, cost structure, strategy, management, financial
position, investments and future financial prospects;
- certain financial projections for Millicom contained in certain
securities analysts’ research reports;
- certain public information regarding Millicom that Nordea
considered to be relevant, including historical Common Share and
SDR prices and trading volumes;
- certain information from external sources regarding the
businesses of other companies which Nordea considered to be
relevant in evaluating those of Millicom and certain other
transactions which Nordea considered relevant in evaluating the
Offers;
- the Offer Documents; and
- such other information as Nordea deemed necessary or
appropriate as a basis for this opinion.
The information on which this opinion is based
has been obtained from publicly available sources or furnished to
Nordea by Millicom or its representatives for the purposes of this
opinion. Nordea has relied upon the accuracy and completeness of
such information without performing any independent verification.
Nordea has assumed, with the Independent Committee’s consent, that
Millicom is not aware of any facts or circumstances that would make
such information inaccurate, inadequate or misleading in any way
meaningful to Nordea’s analysis. Nordea has not conducted an
independent valuation of Millicom’s assets and liabilities.
Nordea is not a legal, regulatory, tax or
accounting expert and has relied on the assessment made by Millicom
and its other advisers with respect to any such issues.
With respect to financial forecasts and other
forward-looking information presented to Nordea by the management
of Millicom, Nordea has assumed, with the Independent Committee’s
consent, that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgements as
to the future financial and other performance of Millicom without
Nordea performing any independent assessment thereof.
This opinion is based on current market
conditions, economic, financial and other circumstances and the
information obtained by or provided to Nordea up to and including
the date of this opinion. Events or circumstances occurring or
becoming known after the date of this opinion may render this
opinion obsolete. Nordea assumes no obligation to update or revise
this opinion to reflect such events or circumstances.
Without prejudice to the generality of the
foregoing, this opinion is given as of the date hereof and does not
take into account the impact of any movement in the USD/SEK
exchange rate following the date hereof on the value of the SEK
equivalent of the Offer Price to be received by holders of SDRs
upon the completion of the Offers.
This opinion does not address the relative
merits of the Offers as compared to any alternative business
transactions available to Millicom or any other investment
opportunities available to the holders of Common Shares and SDRs.
Furthermore, this opinion does not constitute a recommendation to
any holder of Common Shares or SDRs as to whether or not the
holders of Common Shares and SDRs should accept the Offers or any
other matter.
Based on and subject to the foregoing,
it is Nordea’s opinion that, as of the date of this opinion, the
Offer Price is not fair, from a financial point of view, for the
holders of Common Shares and SDRs (other than the Bidder and its
affiliates).
Nordea will receive a fixed fee for its services
upon delivery of this opinion as well as cost reimbursement of
certain expenses, including legal fees. No part of the fee to
Nordea is contingent upon or related to the size of the Offer Price
or whether the Offers are completed or not. Millicom has also
agreed to indemnify Nordea against certain liabilities that may
arise out of its engagement. Moreover, Nordea and its affiliates
have provided and may in the future provide certain investment
banking, commercial banking, financial advisory and other services
unrelated to the Offers to Millicom, the Bidder and their
respective affiliates and have received or may receive customary
fees for such services, including without limitation in connection
with its engagement as Joint Global Coordinator, Joint Bookrunner
and underwriter in connection with Millicom’s Rights Offering in
June 2022. In addition, the Nordea group may in the ordinary course
of its trading, brokerage and investment management activities, on
its own behalf or on behalf of other parties, trade or take
positions in securities directly or indirectly affected by the
Offers.
This opinion is provided solely for the benefit
of the Independent Committee in connection with the Offers and in
accordance with and subject to the limitations set out in the
engagement letter between Millicom and Nordea, and may not be used
for any other purpose, except as specifically set out in the
engagement letter. This opinion may not, in whole or in part, be
published, publicly referred to, summarised or disclosed to or used
by any other party, nor may any public reference to Nordea be made,
without Nordea’s prior written consent, except as specifically set
out in the engagement letter. This opinion is not addressed to and
may not be relied upon by any third party including, without
limitation, creditors, shareholders and SDR holders of
Millicom.
This opinion is being provided under, and solely
for purposes of, the Swedish Takeover Rules and has been prepared
following customary Swedish standards and processes, which may
differ from those customarily followed in the United States or
elsewhere. This opinion shall be governed by and construed in
accordance with substantive Swedish law. Swedish courts exclusively
shall settle any dispute, controversy or claim relating to this
opinion.
NORDEA BANK ABP, FILIAL I
SVERIGE
Corporate Finance
1 Equity free cash flow and Leverage
are non-IFRS measures. Please see Section 3.2 below for more
information on these measures.
2 Due to a conflict of interest based
on their relationship with Atlas (as defined below), Aude Durand,
Maxime Lombardini and Thomas Reynaud have not participated in the
Millicom Board’s handling of matters related to the Offers. All
such matters have been delegated to and handled by the Independent
Committee, which is comprised of the unconflicted members of the
Millicom Board, namely Mauricio Ramos (the Chair of the Board),
Maria Teresa Arnal, Bruce Churchill, Justine Dimovic, Tomas
Eliasson and Blanca Treviño de Vega. Given these circumstances,
Section III of the Takeover Rules is applicable to the Swedish
Offer.
3 The Offer Price per SDR in SEK to
be paid to the holders of SDRs will be set by Atlas based on a
USD/SEK exchange rate close to the settlement date of the Swedish
Offer. The calculation of SEK 252.8 above is based on a USD/SEK
exchange rate of 10.53 (the official currency exchange rate as of
12 July, 2024).
4 Equity free cash flow and
Leverage are non-IFRS measures. Please see Section 3.2 below for
more information on these measures.
5 “Trading Peers” include: Liberty
Latin America Ltd. (LILA), America Movil S.A.B. de C.V.
(AMX), Telefonica Brasil S.A. (VIVT3), and TIM Brasil Serviços e
Participações S.A. (TIMS3). Entel S.A. (ENTEL) is not considered a
relevant trading peer because of its lower profitability margins as
a result of a different business model and product mix, as well as
lower trading liquidity.
6 Comparable multiples and
yields are calculated on a proportionate basis, i.e., accounting
for Operating cash flow and Equity free cash flow as per Millicom’s
definitions at each subsidiary level and adding it pro rata to
Millicom’s ownership in each subsidiary. Operating cash flow is
defined as EBITDA (as defined below) less Capex. Capex is defined
as balance sheet capital expenditure excluding spectrum and license
costs and lease capitalizations.
7 Equity free cash flow is
defined as Operating free cash flow (as defined below), less
finance charges paid (net), lease interest payments, lease
principal repayments, and advances for dividends to non-controlling
interests, plus cash repatriation from joint ventures and
associates. Operating free cash flow is defined as EBITDA,
less cash capex, less spectrum paid, working capital and other
non-cash items, and taxes paid. EBITDA is defined as operating
profit excluding impairment losses, depreciation and amortization,
and gains/losses on fixed asset disposals. Cash Capex is defined as
the cash spent in relation to capital expenditure, excluding
spectrum and licenses costs.
8 Leverage is defined as the
ratio of Net debt over LTM (last twelve month) EBITDAaL, pro forma
for acquisitions made during the last twelve months. Calculations
of Leverage in this statement assume that no capital allocation
activities or transactions, including distributions of dividends,
share repurchases, strategic transactions or similar activities or
transactions, have been undertaken by Millicom in the relevant
period(s). Net debt is defined as Debt and financial liabilities,
including derivative instruments (assets and liabilities), less
cash and pledged and time deposits. EBITDA after Leases (EBITDAaL)
is defined as EBITDA after lease interest expense and depreciation
charge.