Deutsche Telekom sells Strato AG to United Internet AG

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  • Deutsche Telekom to receive around 600 million euros

Deutsche Telekom has reached an agreement with United Internet AG on the sale of Strato AG. United Internet is to acquire Strato through a holding structure, in which the private equity firm Warburg Pincus* will also hold a stake.

Deutsche Telekom will transfer all Strato shares to United Internet for approx. 600 million euros. This represents an Enterprise Value / EBITDA 2016e multiple factor of approx. 12.4x. The transaction is expected to be closed in the first half of 2017.

A first payment of 566 million euros is to be made immediately on completion of the transaction. In addition, up to a further 34 million euros wil be paid at a later stage subject to certain performance milestones.

The transaction is awaiting approval by the German Federal Cartel Office.

The sale of Strato is in line with Deutsche Telekom's strategy of continuing to develop into the leading European telecommunications provider. A component of this strategy is to consider options for increasing the value of business areas that can no longer be adequately developed within the Deutsche Telekom Group, through partnerships or disposals. 

Deutsche Telekom aquired the hosting services provider Strato for 275 million euros in 2009. The company, which was for the most part autonomously managed, has developed well under the value creation oriented advice provided by Deutsche Telekom Capital Partners. Over the last five years, revenues have increased organically from approx. 90 million euros to 127 million euros, and in EBITDA from around 30 million euros to 49 million euros.

Until-now, Strato has been the service provider for the hosting of MagentaCLOUD services within the Telekom Group. The planned future owner, United Internet, will continue to provide these services in the coming years. This will ensure that the data continues to be stored in Germany, which means that strict German legal requirements will be met, and that the services will be underpinned by Deutsche Telekom's data privacy and data security criteria. Nothing will change for Deutsche Telekom's end customers.

Deutsche Telekom was advised on this transaction by Deutsche Telekom Capital Partners.

* WP XII Venture Holdings S.a.r.l., a subsidiary of private equity funds administered by Warburg Pincus LLC (jointly: "Warburg Pincus") 
This media information contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. They are generally identified by the words "expect," "anticipate," "believe," "intend," "estimate," "aim," "goal," "plan," "will," "seek," "outlook" or similar expressions and include generally any information that relates to expectations or targets for revenue, adjusted EBITDA, EBITDA, or other performance measures. Forward-looking statements are based on current plans, estimates, and projections. They should therefore be considered with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom's control. If these risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, the actual results may be materially different from those expressed or implied by such statements. Deutsche Telekom can offer no assurance that its expectations or targets will be met. Without prejudice to existing obligations under capital market law, Deutsche Telekom does not assume any obligation to update forward-looking statements to account for new information or future events or anything else.

About Deutsche Telekom
About Deutsche Telekom Capital Partners 
About Strato
About United Internet
About Warburg Pincus