Apollo and Marcelo Claure discover buyout of LatAm telco Millicom

Buyout group Apollo International Administration has partnered with former SoftBank government Marcelo Claure to discover a takeover of Millicom Worldwide Mobile that might worth the Latin American telecoms firm at virtually $10bn, together with debt, in response to individuals acquainted with the matter.

The group is contemplating a bid at a excessive teenagers per share worth, one of many individuals stated. Millicom’s Nasdaq-listed shares closed at $14.83 on Tuesday, valuing the enterprise at roughly $9bn, given its sizeable money owed.

The individuals acquainted with the matter cautioned {that a} deal won’t materialise.

Millicom’s Nasdaq-listed shares jumped as a lot as 19.1 per cent in early New York buying and selling on Wednesday after the Monetary Occasions first reported the potential deal.

Apollo and Claure try to construction their bid in a method that will keep away from them needing to repay or refinance roughly $6.9bn of Millicom’s present money owed, given the turbulence in monetary markets and the big enhance in rates of interest for the reason that Federal Reserve started tightening coverage final yr.

Banks throughout Wall Avenue are nonetheless struggling to dump billions of {dollars} in debt tied to beforehand agreed non-public fairness takeovers, limiting their willingness to put in writing massive new loans. The backlog has gummed up the pipeline for newer offers, and dealmakers have warned that the upper value of debt has diminished the enchantment of many transactions for leveraged buyout outlets.

Apollo declined to remark. Claure and Millicom didn’t instantly reply to a request for remark.

Apollo’s curiosity in Millicom underscores the funding group’s urge for food to spend money on the communications sector, the place it has spent closely lately.

Final yr, Apollo paid $7.5bn to purchase a unit from communications group Lumen Applied sciences. The division, renamed Brightspeed, supplies phone and broadband companies to greater than 6mn clients within the US.

That deal grew to become one of many high-profile takeovers that banks struggled to finance final yr. Underwriters finally lent Apollo $3.9bn themselves after failing to search out collectors that had been keen to lend to the enterprise.

Claure additionally has loads of expertise within the telecoms business, having based cell phone distributor Brightstar within the late Nineteen Nineties, earlier than promoting the enterprise to Japan’s SoftBank in 2014 for $1.5bn.

He then served as chief government of US cellular group Dash in a turnround effort that helped earn him a spot contained in the inside circle of SoftBank boss Masayoshi Son. Claure was SoftBank’s chief working officer till his departure final yr following a fallout with Son.

Millicom relies in Luxembourg however operates predominantly in Latin America underneath its Tigo model for cellular and cable companies, serving about 50mn clients. The corporate additionally partnered with Visa final yr for its Tigo Cash digital funds product.

Millicom’s share worth has fallen greater than 20 per cent up to now 12 months and its present market capitalisation is about $2.5bn. The corporate has a twin itemizing on exchanges in New York and Stockholm.

Millicom’s inventory has been hit by the weak Colombian peso and issues across the firm burning by means of money throughout the first 9 months of 2022. A tough macro surroundings and excessive inflation have raised questions concerning the group’s means to hit a three-year goal for fairness free money movement.

In accordance with a analysis observe printed by JPMorgan in November, Millicom was probably the most discounted telecom inventory in Latin America as judged by its enterprise worth towards its working free money movement.