Norges Bank Investment Management, of Oslo, said it wouldn't sell its 3.15% stake to Liberty Global at the €35 per-share the Englewood, Colo.-based company is offering.
The offer is a 12.5% premium to the stock's close Sept. 19, the day before the proposal became public. On Tuesday Telenet independent directors said they wouldn't recommend the buyout unless Liberty paid between €39 and €40 per share.
The independent committee's rejection follows an October report by the directors' adviser, Lazard, which valued Telenet at between €37 and €42 per share.
Liberty Global, Denver media magnate John Malone's international investment vehicle, officially launched the offer this week and already owns 50.4% of the Brussels-based group. Liberty in late October removed a 95% minimum acceptance condition which would have allowed it to squeeze out Telenet investors that hadn't tendered their stock.
Liberty Global first bought a 14% stake in Telenet from rival U.S. cable investor John Callahan in 2004 for $23 million. It has since gradually tightened its grip.
"As we strongly believe in the further growth and innovative nature of Telenet, we understand the industrial logic behind Liberty Global's offer. However, based on our thorough review and external advice, amongst others, we believe the offer price significantly undervalues Telenet and, therefore, cannot recommend the offer," Telenet chairman and independent director Frank Donck said in a statement accompanying Tuesday's rejection.
Investors appear to be betting on only a marginally increased bid. The target's stock traded just €0.05 higher in Thursday afternoon trading in Brussels at €35.615.
Liberty's Telenet offer follows a May takeover agreement between Liberty's German Kabel Deutschland Holding AG unit and the creditor-owners of peer Tele Columbus AG. The Tele Columbus takeover gave Kabel Deutschland 1.7 million customers in parts of the former East Germany and was worth €618 million.
Liberty Global is being advised by Morgan Stanley and Freshfields Bruckhaus Deringer LLP. The Telenet board is taking financial advice from UBS.
It's time to take out the revolving doors and replace them with moving sidewalks as yet another top government official and Wall Street critic joins the private sector. For other updates launch today's Movers & shakers slideshow.
The Deal's Rhonda Schaffler speaks with Marc Shaffer an M&A transaction advisory partner with Crowe Horwath. Marc discusses Crowe Horwath's new study, Steering Successful Growth: Value Capture in M&A. More video