October 13, 2008 / 6:18 AM / 11 years ago

UPDATE 2-Novator sells Elisa stake for 194 mln euros

(Rewrites, adds quotes, details)

By Sakari Suoninen and Tarmo Virki

HELSINKI, Oct 13 (Reuters) - Iceland’s Novator said on Monday it had sold its 10.4 percent stake in Elisa ELI1V.HE to Finnish insurer Varma in a deal worth 194 million euros ($266 million), and backed by the Finnish state.

Novator, the Icelandic activist shareholder and investment vehicle of Thor Bjorgolfsson, became Elisa’s top shareholder in 2005.

Novator sold its stake in Elisa for 11.20 euros per share.

“We have regarded Elisa as an interesting investment, as this deal shows,” Risto Murto, Varma’s investment director told Reuters.

As part of the deal, Varma agreed with the Finnish government a put option to sell half or more of the bought shares to the government for the same 11.20 euros per share price.

Varma was one of the leaders of the Finnish insurer battle — which erupted in December 2007 — against Novator’s plans to revamp Elisa.

Elisa shares last traded at 11.20 euros in May 2005, a few months before Novator took the stake in Elisa through a share swap in which Elisa bought smaller operator Saunalahti, owned mostly by Novator.

Shares in Elisa jumped 7.5 percent to 12.27 euros on Monday in line with sharply firmer European bourses.

Varma is Elisa’s largest shareholder after the deal, holding 12.2 percent of the company. Its second-largest shareholder, smaller operator DNA [DNA.UL] walked out of the Novator talks last week.

For the Finnish state, Elisa is an important contract party as well as an essential telecommunications company for the national security of supply, Minister Jyri Hakamies said in a statement.

The state sold its 1.1 million share holding in Elisa in April at 16.70 euros per share. (Reporting by Sakari Suoninen and Tarmo Virki; Editing by Paul Bolding and Simon Jessop)

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