Millicom shares new forecasts as board advises against Niel bid

The Latin America-focused operator group this week disclosed that its independent board committee has formally – and unanimously – advised holders of stock to not accept the public cash offer of $24 per share made to them by Atlas Luxco three weeks ago. Atlas Luxco is a subsidiary of Atlas Investissement, an investment vehicle owned by Niel.

That decision comes as no surprise. When it initially shared details of the offer Millicom made it pretty clear that it believed it to be too low. The statement from the board committee was something of a formality.

Nonetheless, the company is clearly keen to ensure it has shareholders on its side. It's a lengthy statement that outlines in great detail how the bid represents a negative or limited premium on the price of its share and Swedish Depositary Receipts (SDRs) in the US and in Sweden at various recent dates.

The telco also backed up its case with an opinion from Nordea Bank, which was engaged by the independent board committee under takeover rules. The bank adjudged that "the offer price was not fair, from a financial point of view, to the shareholders (other than Atlas and its affiliates)."

To help shareholders make what Millicom believes would be the right decision, the group added some additional details to its financial forecasts for the coming three years.

Millicom previously revealed that it expects to generate equity free cash flow of more than $600 million for full year 2024, excluding $46 million in net proceeds from the sale of the firm's towers in Colombia, and said it will end the calendar year with leverage close to its intermediate target of 2.5x.

It has now specified that it expects FCF of $659 million this year with leverage coming in at 2.4x. For full year 2025 and 2026 FCF increases to $701 million and $833 million respectively, while leverage falls to 1.9x next year and 1.5x the year after.

Millicom also took the opportunity to cast doubt on Atlas' assertion that nothing would change at the company should it take over. The would-be buyer said it had no plans for material changes to employees or management, including contracts, or to alter the business or corporate structure of the company. However, as Millicom has now pointed out, that could all change very quickly.

"Atlas did, however, also note that it will conduct a detailed review of such matters following completion of the Offers and intends to thereafter leverage the long-term knowledge and experience of Atlas and its affiliates in the telecoms sector across numerous jurisdictions to explore potential synergies, focus on long-term business goals and pursue any potential strategic transactions and acquisitions that may arise," it noted.

"Atlas has stated that possible changes could include changes in Millicom’s business, corporate structure, organizational documents, capitalization, management, business development opportunities, indebtedness, dividend policy or to the Board of Directors of Millicom."

All food for thought for shareholders, who have until 16 August to decide whether to accept the Atlas offer, unless Atlas chooses to extend the offer period.

Either way, we should know pretty soon whether Millicom is destined to be taken private.