Millicom deems Atlas takeover offer too low

A committee of independent members of Millicom’s board found that an all-cash tender offer for the company’s outstanding common shares at a price of US$24 each by Atlas Luxco is too low.

Millicom share prices are around US$24.50 at present, up from the US$14 range a year ago.

“The independent committee unanimously believes and has informed Atlas that a US$24 per share offer price would significantly undervalue Millicom” and not be in the best interest of shareholders, Millicom said in a statement.

The conclusion is based on the preliminary review of financial performance for the second quarter 2024 and an equity free cash flow expectation of above US$600mn for the full year. “This expectation reflects results through mid-June and takes into account potential risks that may impact performance,” the company added.

This year’s cash flow does not include US$46mn of net proceeds Millicom received from its previously announced tower sales in Colombia. 

In March, Fitch forecast around US$700mn in equity cash flow in 2022-24 due to the company’s expected cost savings from efficiency initiatives. 

Last year, cash flow was US$550mn. 

During the last analyst call in May, then CEO Mauricio Ramos – who is now chairman – said that operating cash flow in Colombia was roughly doubling over the past year. Colombia is one of Millicom’s biggest markets. 

The committee also said leverage will approach the intermediate term target of 2.5x.

Last year, Apollo Global Management and Claure Group announced a potential buyout of all Millicom shares, but talks ended without a deal.

Millicom reported net profit of US$92mn in 1Q24. Revenue reached US$1.49bn, up 8.9% due to 5% growth in ARPU and government contracts in Panama.

The committee is receiving financial advice from Goldman Sachs and Morgan Stanley and legal advice from Davis Polk & Wardwell and Nord Advokater and Advokatfirman Lindahl.