Modern Times Group (MTG) has sold off its Nordic entertainment and MTG Studios businesses to TDC Group in a deal that values the acquired assets at SEK 19.55 billion ($2.5 billion).
MTG Nordics and TDC Group will combine their businesses to form “Europe’s first fully convergent media and communications provider.” The combined company will have a new name and brand. In combination, the two companies will have 2.8 million TV subscribers in Sweden, Denmark, Norway and Finland.
The current CEO of TDC Group, Pernille Erenbjerg, will become the CEO of the new entity, while MTG Executive VP Anders Jensen will become deputy group CEO. TDC Group Chairman Pierre Danon will become chairman of the combined company. MTG can nominate two new board members in TDC Group, and MTG CEO Jørgen Madsen Lindemann will be proposed to take up one of these seats.
Following the merger, MTG will focus its resources on expanding its global digital entertainment operations.
David Chance, MTG’s chairman of the board, commented: “This combination creates a first of its kind attractive new proposition for both consumers and shareholders in the Nordic region. MTG has a long history of being at the forefront of change, and this combination is further evidence of our commitment to shaping the future of entertainment and creating value for our shareholders. Not only are we creating a leading provider of integrated high-quality consumer products in Denmark and Norway, with the opportunity to expand and integrate its existing Nordic operations, but we are also creating the first fully convergent media and communications provider in Europe.
“Convergence is a reality and the development of ever-improving consumer products requires ever closer and deeper partnerships between content creators and network operators, which is why this combination will provide the brightest future for our Nordic businesses. This combination will create substantial value for MTG shareholders through the synergies, development potential and cash flow generation of the combined large-scale entity, as well as through the accelerated and focused development of our exciting and fast-growing global digital entertainment operations.”
Madsen Lindemann said: “We have enjoyed a long and successful partnership with TDC Group, so we know each other well and understand the value that this combination will create for all stakeholders. Substantial synergies will be unlocked through the combination, and our joint consumer offering will be better, broader and even more available than ever before. The combined company’s growth ambitions will be supported by a strong balance sheet and enhanced cash earnings, investment and distribution capabilities.
“Together, we will have an enhanced platform for the development of the Nordic entertainment and MTG Studios businesses, which have performed so strongly over the past year and will be led into this exciting new combination by MTG’s Anders Jensen, who has a successful track record in both the media and communications industries. MTG will then focus entirely on building out and adding to our global esports, online gaming and digital video content operations. The regulatory review of the combination is expected to conclude in the second half of the year, so it is business as usual for now with full focus on MTG’s ongoing strategic transformation and profitable growth story.”
Pernille Erenbjerg, group CEO and president of TDC Group, commented: “I am very pleased to be announcing the combination of TDC Group and MTG Nordic Entertainment and MTG Studios. The businesses are highly complementary and will allow us to provide our customers with great quality content and much more flexible next-generation entertainment solutions. This company will be the first of its kind in Europe.”
MTG also revealed its Q4 2017 financials, posting sales of SEK 5.3 billion ($674 million). Total net income for the quarter was SEK 652 million ($83 million). Madsen Lindeman remarked: “2017 was a great year for MTG, with 8 percent organic sales growth, 19 percent profit growth and a 33 percent shareholder return. We are now taking the next step by splitting the company to create a convergent Nordic champion and a pure-play digital entertainer.”