The cable network operator Tele Columbus wants to invest massively in its network – but has no money. That should now come from an infrastructure fund in the USA. For this purpose, the company offers itself for takeover. In return, money flows.
The cable network operator Tele Columbus has brought Morgan Stanley Infrastructure Partners on board in order to manage the billions in investments in fiber optic expansion and to reduce its need for borrowed capital. As the company announced, it has agreed with the investment company on a takeover and a subsequent capital increase. The anchor shareholder United Internet also wants to contribute its 29.9 percent stake in the bidding company. Rocket Internet wants to offer its share of 13.36 percent.
The bidding company Kublai GmbH, which belongs to the infrastructure fund of the bank, is offering 3.25 euros per Tele-Columbus share, which corresponds to a premium of 37.5 percent on the weighted three-month average price of the paper. The share value is 415 million euros. Adding the net debt of 1.4 billion euros results in a valuation of over 1.8 billion euros, as Tele Columbus boss Daniel Ritz said in a conference call. On the stock exchange, the papers shot up.
Tele Columbus 3.23
Billions for "Fiber Champion" campaign
The agreement was preceded by a multi-stage bidding process. Germany's number three after Telekom and Vodafone approached ten potential investors. "The strategy needs a lot of capital, we cannot finance that from the operating cash flow." Tele Columbus intends to invest almost two billion euros in network infrastructure and fiber optic expansion over the next ten years as part of the "Fiber Champion" strategy. The employees do not have to worry about the jobs, there are no plans to cut them. All locations are also to be retained. Tele Columbus is to remain listed on the stock exchange and there will be no control and profit transfer agreement.
The offer period is six weeks plus an additional two weeks. It is expected to begin at the end of January after the offer document has been published. Completion is expected in the second quarter of 2021. The minimum acceptance threshold is 50 percent.
Morgan Stanley 64.18
On January 20, Tele Columbus intends to have a capital increase of 475 million euros resolved at an extraordinary general meeting, in which the Morgan Stanley bidding company will participate if the takeover is successful. In addition, once the transaction has been completed, it intends to provide additional equity of up to 75 million euros for the implementation of the fiber optic strategy. The capital increase is expected to take place in May.
United Internet subsidiary wants to market broadband products
"This enables us to significantly reduce our borrowing costs," said Ritz. The costs currently amounted to around ten percent of sales. Without this agreement "all shareholders would have had to inject capital to support the fiber optic strategy".
United Internet AG, which will be involved in the future Tele-Columbus parent company, will also take part in the upcoming capital increase with 142 million to 190 million euros. Even with the planned equity injection of 75 million euros, the Internet company will be on board as part of its participation. In addition, the United subsidiary 1 & 1 Drillisch has signed a preliminary contract with Tele Columbus for the use of the fiber optic network for marketing its own broadband products.
