BERLIN -(Dow Jones)- German telecommunications company Mobilcom AG (MOB.XE) plans to merge with Internet service provider Freenet.de AG (FRN.XE), it said in a statement Friday.
Mobilcom and Freenet want to merge their activities into a new company, Mobilcom said.
It also said that no up-front cash offer to Freenet shareholders was required, nor is the acquisition of Freenet shares.
The Mobilcom management board will hold talks with the Freenet board about the planned merger in the near term.
Mobilcom already owns a 50.4% stake in Freenet,, one of the main rivals to T-Online in the fiercely competitive German market. Freenet in 2003 bought Mobilcom's fixed-line business, leaving its parent to focus on wireless services
The merger will create the potential for higher earnings through the combination of cashflow and resources, Mobilcom said.
It will also create Germany's only complete telecom service provider besides incumbent Deutsche Telekom AG (DT). The reintegration will give the company a "competitive edge," and this could be decisive if there is a consolidation wave in the telecom and ISP markets, Mobilcom said.
Auditing firms will now establish an exchange parity between the two companies' shares. The companies' shareholders will then have to approve the transaction.
Freenet has a market value of around EUR1 billion.
European telecoms operators are re-absorbing their Internet units to better exploit the growth potential of high-speed Internet access.
Deutsche Telekom is buying out minority shareholders in T-Online International AG (TOI.XE) for EUR3 billion. France Telecom SA (FTE) already reabsorbed its Internet unit Wanadoo, while Telefonica SA (TEF) of Spain is in the process of doing so with its ISP.
-By Mathilde Richter and Taska Manzaroli, Dow Jones Newswires; +49 30 288 8410; mathilde.richter@dowjones.com
(END) Dow Jones Newswires"
Posted to the site on 4th March 2005
Posted to: www.cellular-news.com/story/12203.php