American Tower has agreed to sell a big chunk of its European business to Canada’s CDPQ to help it fund the acquisition of Telefonica’s towers business.

The firm has brokered a deal worth in excess of €1.6 billion with investment group Caisse de dépôt et placement du Québec (CDPQ) for a 30% stake in ATC Europe. It is pitching the deal as a long-term strategic partnership that will help both parties benefit from growth potential in the European towers space, but on a simple level this is about bringing in more money to pay for Telefonica’s Telxius division.

Telefonica agreed to sell Telxius, which operates mobile towers in Europe and Latin America, to American Tower for €7.7 billion in January.

“This transaction not only contributes to the funding of our pending Telxius acquisition, which will transform our scale and leadership position in highly attractive markets like Germany and Spain, but also creates a solid, adaptable framework through which future expansion opportunities can be evaluated and financed,” said American Tower chief executive Tom Bartlett.

If there were any doubt that the CDPQ deal is about paying the bill for Telxius it was removed when American Tower launched a new share issue that should raise in excess of US$2 billion, proceeds that will also go towards the takeover.

On Wednesday the firm priced a public offering of 9 million shares – an increase on its previously announced 8.5 million share issue – with an over-allotment option of 900,000 shares. It expects to generate net proceeds of $2.15 billion, rising to $2.36 billion if underwriters exercise their option to buy additional shares in full, after various offering costs are deducted.

“American Tower expects to use the net proceeds from this offering, together with cash on hand and borrowings under its revolving credit facilities and term loans, to finance the recently announced Telxius transaction and to pay related fees and expenses,” the company said. “If for any reason the Telxius transaction is not completed, American Tower expects to use the net proceeds from these offerings to repay existing indebtedness and for general corporate purposes.”

Nonetheless, it would be unwise to bet against more M&A moves from American Tower as it looks to capitalise on the “future expansion opportunities” Bartlett alluded to.

When the company presented its first quarter results late last month, Bartlett talked about American Tower’s plans to bring in new partners in Europe to boost the company’s growth potential; as we now know, this was clearly about CDPQ. He highlighted the fact that American Tower would be the majority partner, driving the business forward, but said he hoped the new partner would participate in potential investments alongside American Tower in future. What those investments might entail is not wholly clear at this stage, but it’s likely the company is looking at both organic and inorganic growth.

CDPQ seems to be on board with that.

“Through this new long-term strategic partnership with American Tower, CDPQ is thrilled to play an active role in establishing one of Europe’s largest independent communications infrastructure providers,” said Emmanuel Jaclot, EVP and Head of Infrastructure at CDPQ. “This dedicated growth platform with a global leader enables us to increase our exposure in key European markets — including Germany, France and Spain — while contributing to the development of critical carrier-neutral telecom networks, at a time where telecommunications needs are more important than ever.”

On completion of the Telxius deal American Tower’s ATC Europe business will have close to 30,000 sites. The Telxius deal is ready to close, Bartlett said last week, so that completion announcement could come any day now.