– Headquartered in Berlin, Germany, Strato AG provides subscription-based, on-demand managed software, supplied around a shared or dedicated hosted domain and web space offering
– The company increasingly adds SaaS offerings for business users, such as homepage builder, fully-equipped eShops and online storage and back-up
– Measured by 1.4m subscription contracts and over 4m hosted domains, Strato is the number 2 web hoster in Europe
– With presence in 50 countries worldwide and a market capitalisation of over €42 billion, Deutsche Telekom is one the world’s leading telecommunications and information technology companies
– Deutsche Telekom provides network access, communications services and value-added services via fixed and mobile networks
– The transaction makes Deutsche Telekom number two for webhosting products in Germany
– Strato enlarges Deutsche Telekom’s existing webhosting platform, providing the combined business with attractive opportunities for further growth domestically and in the rest of Europe and expands Deutsche Telekom’s value-added services offers to residential and SME customers
– Strato will make a positive contribution to net income and free cash flow to Deutsche Telekom
– The disposal of Strato marks the continuation of freenet’s strategy to concentrate on mobile and mobile Internet, which freenet embarked on after acquiring debitel in July 2008
– Arma Partners has a longstanding relationship with freenet, having been retained as lead financial advisor on four assignments, including the transformational €1.6bn acquisition of debitel in 2008
– Arma structured a two stage auction process for Strato, with Stage 1 focusing on educating potential acquirers about the value and potential of Strato’s unusual, software-centric, managed webhosting business model
– Arma proactively contacted buyers on a global basis as well as evaluated inbound expressions of interest. A rigorous selection process was used so as to maintain a manageable process in an environment of extremely strong buyer interest
– The process was constructed to meet the detailed requirements both of strategic and of financial buyers, including the needs of financing providers
– Through a carefully executed process, Arma managed to maximise the exit value for freenet AG