United Internet AG, the leading internet provider in Germany, reached an agreement with US private-equity firm KKR & Co. to acquire its 74.9% stake in Versatel for €586 million (~$771 million), assuming complete ownership of Germanys second-top fiber-optic network operator.
The purchase is “a steal” for United Internet, Usman Ghazi, analyst at Berenberg, wrote in a note cited by Reuters. “The multiples are attractive, the synergies are sensible and can be delivered with relatively low risk, and there is strategic rationale.”
The fibre-optic network of Versatel has about 37 000 km of cable and covers 226 cities, including 19 out of the 25 top cities.
„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,” stated Johannes Pruchnow, CEO of Versatel. “Together we will further strengthen our position in the market.”
Last month United Internet bought a 10.7% stake in German Web-startup investor Rocket Internet AG for €435 million, signaling its expansionist intent.
The move follows the wider trend in Germany for telecoms to seek savings through consolidation as competition for the lucrative broadband market intensifies.
United Internet AG was up 2.97% to trade at €33.83 (~$44.49) per share at 12:07 GMT, logging a one-year growth of 26.89%. As of the previous closing price, the company was valued at €6.37bn (~$8.38bn). According to a Financial Times survey, 19 analysts offering 12 month price targets for United Internet AG have a median target of €38.00, with a high estimate of €45.00 and a low estimate of €20.40. The median estimate represents a 15.66% increase from the last price of €32.86.
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