TALLINN - Speculation on the fate of a TeliaSonera - Eesti Telekom deal dominated headlines over the outgoing week, with a TeliaSonera spokesman saying that its offer to purchase other shareholders' stakes would make sense only if the firm could raise its holding in Eesti Telekom to 85 percent.
Kjell Lindstrom, TeliaSonera's communications director for Norway, Denmark and the Baltics, said on May 13 that the company had come to a point where it wanted to clarify its position to all investors.
"We have decided not to accept a holding smaller than 85 percent, which means that we are not going to take the opportunity of giving up the [minimum shareholding] requirement."
TeliaSonera's interest in acquiring a full holding in Eesti Telekom is motivated by the desire to merge the Estonian company into the TeliaSonera Group and the latter's development system, Lindstrom said.
But TeliaSonera's offer will largely depend on whether the government, which owns 27 percent of Eesti Telekom, accepts it. If the company gets the state's approval, it will need to buy another 9 percent from other shareholders.
Finance Minister Taavi Veskimagi publicly announced that the offered price did not satisfy the state.
TeliaSonera, which owns 49 percent of Eesti Telekom, offered to buy stakes from other shareholders at 111.3 kroons (7.11 euros) per share. The offer is valid until June 10.
Lindstrom defended the offer as a good one, not just for the two companies but for shareholders and the country as well.
"If we should achieve our aim, we wish to do it with the approval of other shareholders. We continue to believe and are convinced that they will see it once they have studied the prospectus more carefully," he said.
Despite the apparent intransigence, analysts were hopeful that a deal would be struck.
Toomas Reisenbuk, investment director at Trigon Capital, said an agreement between TeliaSonera and the government could not be ruled out despite what both the parties have said so far.
"I think both the parties are attempting to be good negotiators and to achieve the best price from their point of view," Reisenbuk said.
The lower the price of Eesti Telekom's shares on the market, the greater the likelihood that the two sides would come to an agreement, Reisenbuk said. The deal could be clinched at a marginally higher price than TeliaSonera's original offer, he added, thus making it possible for the state to show that the price was raised above the original offer (while TeliaSonera could show its shareholders that it succeeded in buying the holding at the market price).
As long as the parties are still meeting to concern the holding, the probability of a deal is still there, the analyst stressed.
Reisenbuk said Trigon was prepared to accept the TeliaSonera offer if the state did the same.
Owning 0.28 percent of the company, Trigon's Central and East European Fund is the biggest Estonian shareholder in Eesti Telekom after the government.
Some analysts expressed the opinion that the state could accept the offer for Eesti Telekom shares if shareholders agreed on a bigger dividend.
