Advised freenet, an alternative telecoms company, on the sale of its DSL division to United Internet, a major German Internet Service Provider
Arma Partners is pleased to announce that it acted as exclusive financial advisor to freenet AG (DB: FNT) in relation to the disposal of its DSL Internet access business to United Internet AG’s (DB: UTDI) subsidiary 1&1 Internet AG for a total consideration of c. €123m (c. $172m) in cash and shares, which was announced on May 26, 2009.
United Internet also agreed to pay a premium in shares, valued at announcement at c. €49m (c. $68m), or its equivalent in cash, for a preferred distribution agreement with freenet, which runs until the end of 2014. The premium will be paid dependent on the achievement of defined distribution targets.
Closing of the transaction is subject to German Federal Cartel Office approval. The parties will undertake a customer migration exercise after closing, in which they expect to migrate c. 700,000 broadband customers by year end 2009.
For Q1 2009, freenet had reported revenues for discontinued business activities, comprising mainly its DSL business, of c. €64m and EBITDA of c. €(9m).
The disposal of the DSL business marks another phase in freenet’s transformation to become a leading mobile services provider in the German market. With the acquisition of debitel Group in July 2008, freenet became a leading mobile services provider with c. 19m subscribers and c. 20% of the overall German mobile market.
This is the third transaction on which Arma has worked with freenet, having advised on freenet’s €1.6bn acquisition of debitel Group and freenet’s acquisition of Tiscali’s German broadband and narrowband contracts in January 2007.