Merger process with T-Online moves ahead: Deutsche Telekom publishes voluntary tender offer for T-Online
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Following the execution of a framework agreement between Deutsche Telekom AG and T-Online International AG dated November 8, 2004, in which the parties expressed their intention to pursue the full integration of T-Online into Deutsche Telekom by way of a statutory merger, Deutsche Telekom today submits a voluntary public tender offer for all of the shares of T Online at a cash price of € 8.99 per share. As previously communicated, the public tender offer is intended to provide market liquidity and price certainty to those T-Online shareholders who may want to sell their shares for cash, in a certain amount known today, and at a time well before completion of the merger transaction. Accordingly, Deutsche Telekom has priced the public tender offer at the XETRA-closing price of T-Online shares on October 8, 2004, the last market price for T Online shares before Deutsche Telekom's announcement of its decision to fully integrate T Online into Deutsche Telekom.
The full integration of T-Online into Deutsche Telekom is essential for Deutsche Telekom's realigned strategy for the development of fixed line and broadband markets in Germany. Deutsche Telekom is convinced that the introduction of a triple-play strategy of combined access, communication and entertainment services to the mass-market is essential for reinforcing broadband growth in Germany. The full integration of T-Online into Deutsche Telekom provides Deutsche Telekom with the necessary flexibility to establish one single customer interface, which is an important prerequisite for the efficient marketing of combined services, and to achieve sustainable customer relationships.
German merger law requires that an independent court appointed merger auditor ("Verschmelzungsprüfer") reviews the merger agreement ("Verschmelzungsvertrag"), in particular the appropriateness of the merger exchange ratio. By decision dated November 15, 2004, the competent court in Frankfurt am Main selected and appointed the audit firm Dr. Ebner, Dr. Stolz und Partner GmbH Wirtschaftsprüfungsgesellschaft, Steuerberatungsgesellschaft as independent merger auditor. In addition, Deutsche Telekom and T Online have each retained separate audit firms who will assist the parties in ascertaining the exchange ratio.
As the merger process advances, Deutsche Telekom will decide if and when to publish additional information on the status of the valuation analysis performed by Deutsche Telekom and T-Online for the determination of the merger exchange ratio. Deutsche Telekom currently expects to publish such additional information in January 2005. In addition, Deutsche Telekom currently expects the merger audit report ("Verschmelzungsprüfungsbericht") of Ebner, Stolz & Partner to be available before the invitations to the requisite shareholder meetings to be held in the first half of 2005.
Based on the results of the preliminary discounted future earnings valuation analysis previously performed by Deutsche Telekom with the assistance of KPMG in accordance with generally accepted valuation principles published by the German Institute of Chartered Accountants (Institut der Wirtschafts-prüfer e.V.), IDW S1, Deutsche Telekom continues to expect that the exchange ratio to be set forth in the merger agreement will, from the perspective of T Online's shareholders, be below the exchange ratio implied by the tender offer cash price of € 8.99 and the current market price for Deutsche Telekom shares.
The public tender offer document is available free of charge from Dresdner Bank AG, Jürgen Ponto-Platz 1, 60301 Frankfurt am Main (Fax No.: +49 (0) 69 91509810). The public tender offer document is being published on the Internet at http://www.telekom.de/tender-offer. A non-binding English translation of the offer document is also available on the Internet at http://www.telekom.de/tender-offer.
You are advised to read the prospectus regarding the business combination transaction referenced in these materials, when it becomes available, because it will contain important information. The prospectus will be filed with the SEC by Deutsche Telekom. You may obtain a free copy of the prospectus (when available) and other related documents filed by Deutsche Telekom at the SEC's website at www.sec.gov, at the SEC's public reference room located at 450 Fifth Street, NW, Washington D.C. 20549 or at one of the SEC's other public reference rooms in New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. When available, the prospectus and the other documents may also be obtained by contacting Deutsche Telekom AG, Attention: Investor Relations, 140 Friedrich-Ebert-Allee, 53113 Bonn, Germany.
This press release contains forward-looking statements. Forward-looking statements are statements that are not historical facts and are identified by words such as "will", "expects", "anticipates", "plans", "intends", "believes" and similar expressions. Forward-looking statements are based on current plans, estimates and projections, and therefore you should not place too much reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statement in light of new information or future events, although we intend to continue to meet our ongoing disclosure obligations under the U.S. securities laws (such as our obligations to file annual reports on Form 20-F and reports on Form 6-K) and under other applicable laws. Forward-looking statements involve inherent risks and uncertainties, most of which are difficult to predict and are generally beyond our control. We caution you that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. These factors include, among other factors, risks and uncertainties with respect to: our expectations regarding the merger share ratio, the timing and completion of the merger and earnings improvements, synergies and other benefits expected from the merger; the ability of the parties to agree on a merger share ratio; the timing and scope of any purchases of Deutsche Telekom or T-Online shares by Deutsche Telekom; and the risk factors detailed in our Annual Report on Form 20-F as filed with the United States Securities and Exchange Commission.