MTG to split, demerging Nordic TV arm after failed TDC deal

STOCKHOLM (Reuters) - Swedish media group MTG MTGb.ST said on Friday it would split in two, demerging its Nordic TV business and listing it on the stock exchange after a sale of the unit fell through last month.

Danish telecoms company TDC TDC.CO dropped a planned $2.5 billion takeover of MTG's Nordic TV business after it received a takeover offer itself from a financial consortium.

MTG said on Friday splitting into two businesses - Modern Times Group and Nordic Entertainment Group - would give each a clear investment profile and allow them to be more focused.

Its shares, which have dropped 14 percent since touching a 2018 high on Feb. 1 when the proposed deal with TDC was announced, were up 2.7 percent to 349.80 crowns at 0939 GMT.

MTG plans to distribute all the shares in Nordic Entertainment Group, which had sales last year of about 14 billion crowns ($1.7 billion), to its shareholders, and list them on the Nasdaq Stockholm exchange.

“I think the probability that someone tries to buy the respective assets is higher if they are separately listed,” said Pareto analyst Stefan Ward, who has a “hold” recommendation on MTG shares.

MTG said Nordic Entertainment Group, which will be headed by business area chief Anders Jensen, would include MTG Nordic Entertainment, MTG Studios and Splay Networks.

Jensen said the new company, whose core profit (EBITDA before group central costs) rose to 1.8 billion crowns last year, was strong enough to stand on its own, but foresaw continued consolidation in the telecom and media sectors.

“The intended merger with TDC made sense and I would say it is a missed opportunity. But we will see both vertical and horizontal consolidation in the Nordic markets for years to come, and we will be part of it and we will embrace the opportunities,” he told analysts and media on a conference call.

MTG will, after the split, include the firm’s e-sports business, online gaming and digital video content operations, as well as other minority holdings.

“MTG will be the only publicly traded, pure play e-sports,online gaming and digital video content company in the western hemisphere,” MTG’s Chief Executive Jorgen Madsen Lindemann said in a statement.

Reporting by Helena Soderpalm and Olof Swahnberg, Editing by Johannes Hellstrom and Mark Potter