An investment arm of U.S. insurer AIG will take control of Bulgaria's dominant telecoms operator BTC in what is the biggest private acquisition deal in the Balkan country, BTC said on Thursday.
Icelandic tycoon Thor Bjorgolfsson has agreed to sell his 65% option in BTC to AIG Global Investment Group (AIGGIG) for 1.08 billion euros ($1.47 billion).
"The acquisition is believed to be the biggest private M&A transaction in Bulgaria to date," BTC said in a filing to the Bulgarian Stock Exchange.
Bjorgolfsson's call option in BTC gives him the right to buy a 65% stake in the company acquired by private equity firm Advent International through its investment arm Viva Ventures in a 2004 privatisation.
In winning the deal AIGGIG, through its private equity firm AIG Capital Partners, beat rival suitors Saudi Oger Telecom and Turkish mobile phone operator Turkcell.
It also outbid U.S. private equity fund Mid Europa Partners and a consortium of U.S. private equity firms Texas Pacific Group and Warburg Pincus.
AIGGIG, which manages more than $687 billion in assets, is expected to acquire another 25 percent in BTC as part of the agreement shortly, BTC said.
The new owner will exercise the option on or after June 11, when the three-year ban on selling the controlling package expires. The deal is subject to the approval of the regulatory and competition authorities.
After the transaction is completed AIGGIG will launch an offer for the remaining shares in BTC.
BTC's share price has been on the rise since January, when Bjorgolfsson said he was considering selling his option. Trading was halted an hour after the announcement that the deal was reached at 11.25 levs per share.
They dropped by more than 7% after trading resumed to 11.20 levs per share after closing at 12.12 on May 2.
"We are attracted by the growth prospects, nationwide footprint, strong management team ... BTC's acquisition fits well into our strategy of investments in this growing region," said Pierre Mellinger from AIG Capital Partners.
BTC, which also controls the new EU member nation's third mobile phone operator, has forecast a 16 percent drop in its net profit to 111.6 million levs ($77.71 million) this year due to increased competition and dropping prices.
Its net profit dropped 5.3% to 42.6 million levs in the first quarter due to rising operational and amortisation costs, although its revenue grew by 1.2% to 255 million levs from the same period a year earlier, the company's consolidated results showed.