LUXEMBOURG - The independent committee of Millicom International Cellular S.A.'s board has once again advised shareholders against accepting the revised public cash offer by Atlas (NYSE:ATCO) Luxco S, stating that the offer significantly undervalues the company.
Atlas, a subsidiary of Atlas Investissement S.A.S., had increased its bid from $24.00 to $25.75 per common share and per Swedish Depository Receipt (SDR), but the committee maintains its stance that the offer is not in the best interests of shareholders.
The committee's decision follows a comprehensive evaluation of the revised offer announced on August 2, 2024, and a fairness opinion from Nordea Bank Abp (OTC:NRDBY), which deemed the offer financially unfair to shareholders, excluding Atlas and its affiliates. This opinion, dated August 8, 2024, reinforces the committee's initial recommendation made on July 15, 2024, to reject Atlas's original offer.
Atlas Luxco's revised offer values Millicom at approximately $4.4 billion, or SEK 47.4 billion, a premium compared to previous closing prices on both Nasdaq Stockholm and Nasdaq US. Despite this, the committee's assessment, which includes Millicom's strong second-quarter financial performance and an analysis of trading multiples and control premia, led to the conclusion that the offer does not reflect the company's true value.
The committee highlighted Millicom's second-quarter revenue, EBITDA, and operating cash flow growth, as well as a significant increase in equity free cash flow and a reduced leverage ratio. These factors, combined with the company's expectations for the full year, suggest a promising financial trajectory that the committee believes is not adequately captured by Atlas's offer.
The acceptance period for Atlas's offer ends on August 16, 2024, with an estimated settlement date around August 29, 2024. Atlas has reserved the right to extend the acceptance period and postpone the settlement date. The completion of the offer is subject to several conditions, including regulatory approvals and the absence of any material adverse effect on Millicom.
As of the latest update, Atlas, through affiliates, owns approximately 29.17% of Millicom's share capital and votes. The committee's unanimous recommendation not to tender shares is based on a statement issued by Millicom, and further information is available on the company's website.
This article is based on a press release statement from Millicom International Cellular S.A.
In other recent news, telecommunications and digital services provider, Millicom, demonstrated robust financial performance in the second quarter of 2024. The company's equity free cash flow surged to $268 million, and a notable 20% increase in organic EBITDA was observed, driven by strategic efforts in its mobile and business-to-business sectors. Service revenue rose by 5.5% YoY to $1.36 billion, and EBITDA increased to $634 million, marking a 23.1% YoY growth.
The company's leverage ratio improved to 2.7 times, as net debt was reduced. Additionally, Millicom's capital expenditure for 2024 is projected to be under $700 million, a significant decrease from 2023. The company is executing strategic projects in Colombia and Costa Rica, aiming to enhance future cash flow.
Despite strong growth in Panama and Guatemala, service revenue remained flat in Bolivia and Paraguay, indicating potential areas for strategic adjustments. The company is currently in negotiations regarding its tower portfolio and investments in Colombia's networks. These are recent developments and represent Millicom's ongoing efforts to bolster its operations and cash generation.
InvestingPro Insights
Amidst the ongoing discussions about Atlas Luxco S.à r.l.'s bid for Millicom International Cellular S.A., investors and stakeholders are keenly observing the financial health and market position of Millicom. According to InvestingPro data, Millicom, also known by its ticker TIGO, presents an interesting financial profile.
With a market capitalization of $4.38 billion, Millicom is trading at a high earnings multiple, with a current P/E ratio of 40.98. This reflects a valuation which suggests that investors have high expectations for future earnings growth. Despite the high P/E ratio, Millicom has shown a solid performance with a revenue growth of 5.68% over the last twelve months as of Q2 2024, indicating a steady increase in its business activities.
One of the notable InvestingPro Tips for Millicom is that the company is expected to be profitable this year, which aligns with the committee's positive outlook on Millicom's financial trajectory. Additionally, Millicom has been trading near its 52-week high, with its price reaching 97.67% of the peak, signaling strong market confidence in the company's performance and potential.
For those interested in a deeper analysis, there are 9 additional InvestingPro Tips available for Millicom at https://www.investing.com/pro/TIGO. These tips provide further insights into the company's valuation, analyst expectations, and market performance, which could be particularly valuable for shareholders evaluating Atlas's offer.
The committee's assessment of Millicom's value, alongside the InvestingPro data and tips, suggests that the company's financial health and growth prospects may indeed not be fully reflected in the current offer from Atlas Luxco S.à r.l.
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