Freenet Weighs Drillisch Merger, Focusing on Savings, CEO Says
Freenet AG (FNTN), Germany’s biggest non- network telecommunications company, said it wants to evaluate a potential merger with its biggest shareholder, Drillisch AG (DRI), to see whether cost savings would make a deal viable.
“We’ll look into whether it makes sense” to merge related operations, Chief Executive Officer Christoph Vilanek said at the annual shareholder meeting in Hamburg today. “If you don’t compare things side by side to the last detail, it’s difficult to say whether a combination makes sense.”
Drillisch this year raised its stake in Freenet to about 22 percent after buying shares from Bank of America Corp. Drillisch, which focuses on the no-frills wireless segment, hasn’t ruled out increasing its holding to just below 30 percent, CEO Paschalis Choulidis told Boersen-Zeitung yesterday.
After largely completing the integration of Debitel AG in May, Freenet’s management now has the capacity to look into whether a merger with Drillisch would lead to cost savings, Vilanek said.
A takeover by Maintal, Germany-based Drillisch “makes little sense,” because Drillisch can’t raise its stake to 30 percent without affecting losses carried forward by Freenet to cut tax liabilities, the CEO said. A merger would only require the consent of 75 percent of Freenet’s voting shares, he said.
Freenet, based in Buedelsdorf, bought Debitel in 2008 and sold its DSL business to United Internet AG (UTDI) the following year to focus on mobile services. The company buys access to wireless networks from operators like Deutsche Telekom AG and Vodafone Group Plc and served about 2 million prepaid users and around 6 million contract customers as of the end of last year.
Freenet today confirmed its outlook for 2011 and 2012, saying earnings before interest, taxes, depreciation and amortization will total 325 million euros ($471 million) this year and more than 300 million euros next year.
To contact the reporter on this story: Cornelius Rahn in Frankfurt at firstname.lastname@example.org