Industri Kapital in E350m Telia acquisition

The buyout firm has bought eight companies as part of the Swedish telco's restructuring.

Industri Kapital has agreed to pay SK3.2bn (E350m) for a 51 per cent stake in eight companies and their affiliates owned by Swedish telecommunications company Telia. They are presently part of the Telia Enterprises division. Telia will retain a 49 per cent stake in the businesses.

The present management of the businesses will be retained. Björn Savén, chief executive of Industri Kapital, said: “We see a great potential for these businesses to develop, each with respect to its specific competence, in a fast growing and highly dynamic market. We also look forward to working together with Telia in further developing these companies.”

The eight companies covered by the agreement are Swedia Networks AB, Telia Prosoft AB, Respons AB, Validation AB, Telia Swedtel AB, Telia Dokumentation AB, Multicom Security AB and TA Teleadress Information AB and their respective subsidiaries. The companies currently have 5,622 employees. A spokesperson for Industri Kapital told PEO that the company's strategy is very much towards growth and it does not anticipate job losses.

Christian Salamon, a director at Industri Kapital explained that each company included in the deal has a core competence in their respective telecom business area. “To date many of these firms have supplied their services mainly to Telia, and exciting opportunities lie ahead for these companies as they focus on increasing sales to external clients,” he said. Each will have its own independent development plan but a key part of the growth plan will be to develop from being pure in-house supplier to being independent companies operating on usual market terms.

Telia and the businesses being sold have agreed a tapering supply and volume commitment until the end of 2003 which provides Telia with security as to the availability of important services from these companies. In return Telia has confirmed its commercial support to the businesses while they continue their active development of new clients.

The transaction is expected to close in May, or when a clearance from the European Commission has been received. The acquisition is being made from the Industri Kapital 2000 Fund which closed at £2.1bn in January this year. 2000 is the buyout firm’s fourth fund. The company said it will continue to implement an investment strategy of acquiring and developing medium to large sized divisions or subsidiaries of larger groups, and family businesses, as well as attractive public-to-private targets in various industries.