United Internet increases Versatel stake to 100%

3 Sep 2014

United Internet, a provider of broadband and telephony services in Germany under the brand 1&1, has signed an agreement with private equity firm Kohlberg Kravis Roberts & Co (KKR) to acquire its 74.9% stake in fixed line operator Versatel for around EUR586 million (USD769 million) in cash. United Internet has owned a 25.1% stake in Versatel since late 2012, thus the new acquisition raises the company’s total holding to 100%. With the acquisition of Versatel, United Internet will gain access to Germany’s second largest fibre-optic network, which spans 37,000km and can be accessed in 226 cities, including 19 of the 25 largest cities in the country. Versatel operates approximately 440,000 ADSL and SDSL connections, which when added to the number of xDSL customers in the United Internet Group will bring the total to 4.12 million. Commenting on the deal, Versatel CEO Johannes Pruchnow said: ‘We very much look forward to our joint future together with United Internet. We are convinced that Versatel is an excellent addition to the existing portfolio, be it in the B2B area or as a network infrastructure supplier. Together we will further strengthen our position in the market’.

United Internet will pay around EUR586 million in cash for the 74.9% stake, with the purchase price and repayment of Versatel’s existing net bank liabilities of EUR361 million to be financed by new loans. The share purchase is to be effected via a complete takeover of Versatel’s holding company VictorianFibre Holding. The Versatel brand will be retained and the company’s B2B business is to be expanded further. The planned investments for the years up to 2019 – especially for the expansion of Versatel’s DSL infrastructure – are likely to total around EUR145 million. The transaction, which is subject to approval from the antitrust authorities, is expected to be closed in October 2014. On completion of the transaction, Versatel will be fully consolidated as a wholly-owned subsidiary in the financial statements of the United Internet Group.

Germany,Versatel Communications, United Internet (1&1),

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