Telefonica, being a top Spanish telecom service, has made a deal with Dutch telecom company KPN to acquires its German subsidiary E-Plus. The acquisition deal is done for a staggering $6.58 billion/ 5 billion euros in cash plus 17.6% stakes in the resulting company.
The deal has been sealed. Telefonica and KPN's E-Plus are going to be known by one and the same name from now onwards. KPN will get a total of $10.7 billion/8.1 billion euros through this cash and stake deal. Telefonica’s branch in Germany, Telefonica Deutschland, will engulf the new Deutsche acquisition. This in turn will lead to the creation of Germany’s biggest telecom operations system in terms of subscribers. And it will be the #2 player in all of Europe as calculated by subscriber numbers to boot and revenues. The stakes will be divided in a suitable manner between the shareholders.
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Telefonica’ and KPN deal will be completed in two phases. Telefónica Deutschland will pay KPN 3.7 billion euros in cash and a 24.9% stake of the resulting company during first phase of transaction. The company announced that in second phase, "Telefónica S.A. will buy a 7.3% stake of the combined entity from KPN for a total of 1.3 billion euros. As a result, Telefónica will hold a final 65% stake in the new company, KPN will have 17.6% and the remaining shares will be free float."
This merger has one distinct advantage. It has left Vodafone and T-Mobile way behind panting in the dust. The service will have a user base of 43 million customers. Plans for this takeover were in the works for a decade. Since opinions had clashed, the thing never got off the ground. That was until a few months ago, when new negotiations began and bore fruit.
The EU will be keeping an eagle’s eye on this enterprise since it affects the whole of the continent in a crucial manner. Telefonica always wanted to outdo Deutsche Telekom and Vodafone. Now it has finally been granted this wish. But anti-trust agencies will remain a constant thorn in the side for Telefonica in future times.
The German company E-Plus that Telefonica took over was under the Dutch organization KPN’s umbrella. With Germany’s economy being the leading factor in Europe, this deal will influence the overall financial climate of many of the Old World’s nation states. This deal is expected to close during the first half of the next year.