Freenet board approves Debitel acquisition

22 Apr 2008

The board of German multi-service operator (MSO) Freenet has approved the purchase of German mobile reseller Debitel for EUR1.6 billion (USD2.5 billion), according to a report in Focus magazine, citing company sources. It is expected that the deal will be finalised within days. Included in the overall price is Debitel’s EUR1.1 billion in debt, which Freenet will take over. To fund the purchase, Freenet will receive a loan of EUR100 million from Debitel’s 100%-owner Permira, while Permira will receive EUR200 million cash plus EUR400 million in Freenet shares. In addition, Freenet will launch a rights issue of around 32 million shares, and will look to sell its fixed line and internet division, which is valued at between EUR400 million and EUR600 million. When this transaction is completed, Freenet will focus on providing mobile services. One person who will not be happy is CEO of German ISP United Internet, Ralph Dommermuth, who is known to be very keen on acquiring Freenet via MSP Holdings, a joint vehicle with MVNO Drillisch. MSP already owns 25.24% of the MSO. Last week Dommermuth threatened Freenet’s board with possible legal action should the Debitel deal go through.

Germany, debitel, freenet, United Internet (1&1)