United Internet buys Versatel Germany

German internet service provider United Internet this week signed an agreement with private equity firm Kohlberg Kravis Roberts to acquire all outstanding shares of network operator Versatel for €586m in cash.

United Internet has held an indirect stake in Versatel of 25.1 per cent since the end of 2012 and will perform a complete takeover of Versatel’s holding company, Düsseldorf-based VictorianFibre Holding, to acquire the remaining 74.9 per cent. The funds are managed by KKR and will result in United taking a 100 per cent stake in Versatel.

With the acquisition of Versatel, United Internet will gain access to Germany’s second-largest fibre-optic network with a length of around 37,000 km. It can be accessed in 226 cities, including 19 of the 25 largest cities in Germany.

Over 5,000 locations are directly connected to Versatel’s fibre-optic network and the company has around 440,000 ADSL and SDSL connections, which raises the number of DSL customers in the United Internet Group to a total of 4.12 million. United Internet will thus strengthen its market position as Germany’s second-largest DSL provider after Deutsche Telekom.

United is also planning to source DSL pre-services produced by Versatel and save up to €55m per year. Planned investments for the years up to 2019, including the expansion of Versatel’s DSL infrastructure, are likely to total €145m. For the fiscal year 2014, Versatel expects revenues of around €548m – almost flat year on year – and an EBITDA result of €164m.

“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, be it in the B2B area or as a network infrastructure supplier,” said Johannes Pruchnow, CEO of Versatel.

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