Freenet signs agreement to buy Debitel for $2.5B

BUEDELSDORF, Germany—German Internet and telecommunications provider Freenet AG said Sunday that it has agreed to acquire mobile telephone operator Debitel for about 1.63 billion euros ($2.54 billion).

Debitel Netherlands Holding BV, controlled by Permira Advisers LLP, will receive 32 million new Freenet shares to give Permira a 24.99 percent stake in the company. Freenet also will receive a long-term 132.5 million euro ($206.5 million) loan from the vendor.

On a cash-free basis, Debitel will be acquired with financial liabilities of about 1.135 billion euros. Completion of the transaction is subject to antitrust approval by the German cartel authority and establishment of the conditions necessary for listing the new shares.

Permira has agreed to a lock-up for 100 percent of the new shares until the end of Freenet's 2008 annual general meeting, and for 60 percent of the new shares until the end of 2009 meeting, in any event not longer than Aug, 31, 2009.

As a consequence of the transaction, Buedelsdorf-based Freenet doesn't intend to pay a dividend in 2008.