DTelekom snares $3.2B ISP
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February 16, 2000: 4:16 a.m. ET
German phone giant links with France's Lagardère to form Internet alliance
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LONDON (CNNfn) - Deutsche Telekom agreed Wednesday to acquire Internet access provider Club Online from France's Lagardère in a deal valuing the French unit at up to $3.2 billion. Telekom also announced a strategic partnership with Lagardère to give a much-needed boost to its own international Web strategy.
Telekom will acquire 99.9 percent of Club Internet in a share swap, which will give Lagardère a 6.5 percent stake in Telekom's T-Online, Europe's largest Internet service provider (ISP) with 4.2 million subscribers and 60 percent of the German market for Web access.
Deutsche Telekom (FDTE) plans to float a minority stake in T-Online in April in a transaction that could value the unit at up to 50 billion euros ($49 billion).
Lagardère (PMMB), a Paris-based conglomerate with interests spanning from missiles to magazines such as Paris Match and Elle, last month reportedly turned down a Telekom bid worth 450 million euros for half of Club Internet. The portal is the second-largest in France with 320,000 subscribers, trailing France Telecom's Wanadoo unit, which has 1.2 million subscribers. The number of online connections in France is forecast to grow by 60 percent a year until 2003.
Investors in Paris and Frankfurt welcomed the deal, with Lagardère stock quickly suspended after rising to 105.5 euros at the open, up 10 percent, its temporary limit. Telekom stock jumped 5 percent to 88.40 euros in Frankfurt.
Telekom has been looking to expand beyond Germany following the collapse of its relationship with France Telecom (PFTE). The companies' agreement folded last year when Telekom abandoned its French partner in favor of an ultimately unsuccessful attempt to merge with Telecom Italia.
Telekom also said Wednesday it was planning a joint venture with German media group Kirch to develop and market hardware and software for TV-oriented multimedia platforms.
Lagardère will be the second-largest shareholder in T-Online following the IPO, and will have a seat on the board. The French firm will continue to provide the content for Club Internet for at least three years
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