PresseBox
Press release BoxID: 265475 (United Internet AG)
  • United Internet AG
  • Elgendorfer Straße 57
  • 56410 Montabaur
  • http://www.unitedinternet.de
  • Contact person
  • Marcus Schaps
  • +49 (2602) 96-1076

United Internet to acquire freenet's DSL business; preferred distribution partnership agreed

(PresseBox) (Montabaur/Büdelsdorf, ) United Internet AG's subsidiary 1&1 Internet AG and freenet AG announce that they have today signed an agreement for the acquisition of freenet's DSL business and a preferred distribution partnership in respect of DSL products.

Closing of the transaction is subject to a number of usual conditions, in particular the receipt of clearance from the German Federal Cartel Office. The purchaser will acquire the entire issued share capital of freenet Breitband GmbH.

The agreed purchase price for the acquisition is ca. €123 million, payable as to ca. €70 million in cash and as to 4,583,500 in United Internet shares, which will be paid from treasury shares. To the extent the trading price of a United Internet share is below €12 at the time of the technical migration of freenet's broadband contracts, a compensating per share cash amount, capped at €4 per United Internet share, will be paid. United Internet is also permitted to pay the entire purchase price in cash. The purchase price, which is mainly payable upon completion of the technical migration, will be adjusted on a per contract basis. The final amount paid will therefore depend on the number of DSL contracts ultimately migrated. It is intended that the technical migration be completed before year end 2009.

In connection with the signing of the distribution agreement, which will come into effect after competition clearance of the transaction and have a minimum term until 2014, 1&1 Internet AG has agreed, in addition to payment of market-normal DSL commissions, to pay a premium in the period until end of 2014 of up to 6,551,000 United Internet shares (today's market value ca. €49 million). The premium will be payable in four tranches, depending on achievement of defined annual distribution targets. 1&1 is also permitted to pay the premium in cash.

1&1 Internet AG will acquire all freenet's freenetDSL and freenetKomplett contracts. Customers of associated companies and of wholesale partners are not included in the acquisition and will be retained by freenet. It is estimated that, at the point of technical migration, approx. 700,000 DSL contracts will be transferred to 1&1.

Christoph Vilanek, CEO of freenet AG, commented: "As a result of the long consolidation experience of both companies, our customers will not see any change in their service during the migration of their contracts. It is especially important for us to have found in United Internet's 1&1 subsidiary a partner, which is able to secure the transition of our customers without any effect on the quality of service."

In the distribution agreement, 1&1 and freenet have agreed to enter into a long-term partnership for the preferred distribution of broadband-based internet access products. The relevant distribution channels are, in particular, ca. 1,000 mobilcom-debitel shops and the Internet portal freenet.de.

"With this transaction, we are continuing to implement our strategy of concentrating on mobile and mobile Internet. We can also now focus even more on establishing the new mobilcom-debitel brand in the market and on delighting our customers with attractive offers, the widest choice, good advice and excellent service", said Christoph Vilanek about the sale of freenet's DSL business. "From June we will also offer United Internet's DSL products in our shops, on a preferred basis, alongside the products of other vendors, so that we can offer our customers an even wider choice", continued Vilanek.

Ralph Dommermuth, CEO of United Internet, commented: "Today is an important day for United Internet and freenet. In addition to acquiring the DSL customer contracts, we are creating a long-term distribution partnership and are securing for 1&1 access to one of the most significant distribution channels in Germany. Our objective is together to win around 500,000 DSL customers over the next five years. "

*transaction values are all based on the XETRA closing price of a United Internet share on 25nd May of €7.53