Telefonica to acquire E-Plus from KPN

Nieuws Mobiel Duitsland 23 JUL 2013
Telefonica to acquire E-Plus from KPN

KPN has agreed to sell its German mobile operator E-Plus to Telefonica for EUR 5 billion in cash and a 17.6 percent stake in Telefonica Deutschland. The deal will make Telefonica the largest mobile operator in Germany with 43 million subscribers and consolidate the market to three mobile networks. Telefonica expects synergies of EUR 5.0-5.5 billion from the merger, net of integration costs. The transaction values E-Plus at a total EUR 8.1 billion, equal to 9.0x the company's estimated 2013 EBITDA.

KPN will use the cash to strengthen its balance sheet, allowing it to resume dividend payments in 2014, and refocus on its home market the Netherlands and growth in Belgium. Its net debt-to-EBITDA is expected to fall to 1.5 after the sale. At the same time it will recognise a loss of EUR 1.3 billion in the third quarter on E-Plus, mainly due to lost deferred tax assets. 

At completion of the transaction, KPN will transfer 100 percent of its interest in E-Plus to Telefonica Deutschland for EUR 3.7 billion in cash and newly issued shares in Telefonica Deutschland representing 24.9 percent of the share capital. Simultaneously, Telefonica will acquire a 7.3 percent interest in Telefonica Deutschland from KPN for EUR 1.3 billion in cash. KPN's remaining interest of 17.6 percent in Telefonica Deutschland will be subject to a lock-up period of 180 days. 

The transaction is expected to close in the first half of 2014, subject to approval by KPN and Telefonica Deutschland shareholders as well as the German regulator. Telefonica Deutschland will finance the cash component of the transaction through a rights offering fully underwritten by Telefonica SA. After the takeover of E-Plus, Telefonica's stake in the German subsidiary will drop from 76.8 percent to 65 percent.  

Telefonica said the merger will make it the second-largest mobile operator in Europe in terms of subscriber numbers, while also strengthening its growth and cash generation profile. The Spanish operator reiterated its target for net debt of less than EUR 47 billion by the end of this year.

Categories:

Mobiel

Companies:

E-Plus,  KPN,  Telefonica Deutschland,  Telefonica

Countries:

Duitsland

Tags:

Voice services, M&A buyouts & divestments

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