UPDATE 3-TDC share sale seen among Europe's biggest of 2010

By John Acher and Chris Vellacott COPENHAGEN/LONDON, Nov 12 (Reuters) - TDC's private equity owners are preparing to sell about $2.9 billion of their shares in Denmark's largest telecoms group, in what could be one of Europe's biggest stock offerings this year. A sale would give the owners a partial exit from TDC, which they took control of in a 2005 buyout, and effectively relaunch the company on the Copenhagen bourse in a similar way to an initial public offering (IPO). Last month, Danish jewellery maker Pandora tapped investor demand to make a successful $2 billion stock market debut. A recent rise in equity markets has helped support a resurgence in European IPOs, with a number of companies able to price their offerings near the upper end of guidance and seeing strong demand in the aftermarket. But bankers say investors remain discerning, particularly with regards to price and growth potential. "We are looking at the valuation (of TDC)," said the manager of a large, Stockholm-based, Nordic equities fund, which owned shares before the 2005 takeover. "It has to be benchmarked not only against the Nordic but also other pan-European peers and .. we see other stocks trading at very undemanding multiples," he said." TDC says its most comparable European peers in terms of their business and financial profiles are Belgium's Belgacom , KPN of the Netherlands and Swisscom of Switzerland. TDC's main owners -- private equity investment firms Apax Partners, Blackstone Group, Kohlberg Kravis Roberts , Permira Advisers and Providence Equity Partners -- together hold nearly 88 percent of the stock. Danish pension group ATP owns 5.5 percent, leaving a free float of less than 7 percent. One banker said the offer price could be close to the current market price, as he saw no reason to give a big discount for a stock that already trades at a discount due to its small free float. Two sources familiar with the matter said TDC's owners would sell about $2.9 billion worth of shares, while a banking source said they could reduce their stake to below 50 percent if demand was strong enough. TDC Chief Executive Henrik Poulsen declined to comment on the size of the offering, saying it would be determined by the level of demand. "The selling shareholders will remain a significant investor in TDC after the offering, and have committed to a lock-up on their remaining holdings for 180 days following the transaction," TDC said. TDC's shares jumped as much as 4.5 percent before trimming gains to 3.6 percent at 52.30 crowns by 1418 GMT, giving the company a market capitalisation of about $9.5 billion. The STOXX 600 Europe telecoms index was down 0.5 percent. After selling Swiss unit Sunrise in October, TDC is a focused Nordic telecom competing with larger rivals Swedish-Finnish TeliaSonera and Norway's Telenor . Preliminary marketing of TDC shares, which will be sold to Danish and international institutional investors, would begin immediately and last two weeks, banking sources said. An indicative price range for the offer, which had been widely expected, is expected to be set on Nov. 25. TDC said on Friday it had repaid about 8.2 billion of its outstanding debt, in line with a Nov. 3 announcement, and it would adopt a leverage policy that would obtain an investment-grade rating. That repayment and a proposal to repurchase up to 9 billion crowns worth of TDC shares were seen as the final steps in a streamlining process that paved the way for the share offering. TDC said that if the buyback proposal is accepted, it would not pay a dividend for 2010 but would recommend a dividend of 4.35 crowns per share for 2011. It said the board aimed to adopt a dividend policy for subsequent years to pay out 80 to 85 percent of equity free cash flow annually. JP Morgan, Morgan Stanley and SEB will be joint global coordinators and bookrunners for the offering, and Deutsche Bank and UBS will be joint bookrunners, TDC said. Credit Suisse, Goldman Sachs, Nomura, HSBC and Danske Markets will be joint lead managers, Danske Markets, SEB will be Nordic retail bookrunners, and BNP Paribas and Carnegie co-lead managers, TDC said. (Additional reporting by Peter Levring and Ole Mikkelsen in Copenhagen, Kylie MacLellan and Chris Vellacott in London and Arno Schuetze in Frankfurt; Editing by Erica Billingham) ($1=.9696 Swiss Franc) ($1=5.465 Danish Crown) Keywords: TDC/ (john.acher@reuters.com; +45 2630 9650; Reuters Messaging: john.acher.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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