United Internet to Buy Full Control of Versatel From KKR

By Ilya Khrennikov

United Internet AG (UTDI), a German Web-access provider, agreed to buy full control of fiber-optic network operator Versatel GmbH for 586 million euros ($769 million) to challenge rivals such as Deutsche Telekom AG.
The Internet carrier agreed to buy the 74.9 percent of Versatel it didn’t already own from U.S. private-equity firm Kohlberg Kravis Roberts & Co. (KKR) in cash, according to a statement from the Montabaur, Germany-based company today. It has owned a 25.1 percent stake since 2012.
The deal further consolidates Germany’s telecommunications industry as
operators combine to cope with price pressure caused by competition. In July, Telefonica SA (TEF) won European Union approval to merge its German unit with Royal KPN NV (KPN)’s E-Plus after it pledged to bolster smaller rivals and divest spectrum, a merger creating the country’s largest mobile carrier.
The Versatel acquisition gives United Internet Germany’s second-largest fiber-optic network, which covers 226 cities and is about 37,000 kilometers (23,000 miles) in length. It will bolster United Internet’s position as the country’s second-largest digital subscriber line provider after Deutsche Telekom AG, boosting the number of its DSL customers to 4.12 million.
Versatel will probably have earnings before interest, taxes, depreciation and amortization of 164 million euros this year, while sales will be little changed at 548 million euros, United Internet said. Versatel’s management team will continue to head the business. KKR bought Versatel in 2011.
Last month, United Internet bought a 10.7 percent stake in German Web-startup investor Rocket Internet AG for 435 million euros.
Shares of United Internet advanced 0.2 percent to 32.86 euros yesterday in Frankfurt. They have gained 6.3 percent this year.