Leaves field clear for KKR bid
Reuters has revealed that Spain’s Cellnex is withdrawing its offer for a stake in Deutsche Telekom’s (DT’s) towers business, leaving the field clear for KKR to secure the estimated €18 billion ($18.02 billion) deal. DT has been working with Goldman Sachs, which was appointed as adviser in the sale of its 40,600 masts. The DT tower sale process had begun March with strategic private equity bidders vying with infrastructure funds for a stake in the masts unit known as Deutsche Funkturm (DFMG). Vodafone’s towers business Vantage Towers, as well as American Tower had reportedly considered bids earlier in the auction process.
DT wants to keep control
Cellnex offered DT a small stake in its own business as part of a binding offer backed by Canada’s Brookfield Asset Management. The rival offer from private equity fund KKR, backed by US investment firms Global Infrastructure Partners (GIP) and Stonepeak, tempted DT with promises to retain control of its towers business, while giving KKR some corporate governance control. “Despite the fact that the tower business in Germany would have been a strategic fit for Cellnex and would trigger significant immediate growth for it … we believe that the company’s growth for the coming years will be guaranteed with the latest purchases made,” said an analyst’s note from Spain’s Banco Sabadell. It said Cellnex could withstand not entering the German market as its business would still benefit from its ambitious expansion in Europe in recent years.
Debt clearance
The DT tower transaction, if and when it happens, is Germany’s biggest deal this year and Europe’s second largest, after the takeover of Italian infrastructure group Atlantia for €58 billion euro. DT wanted to retain some control of its towers business, meaning an industrial combination was not preferred, Reuters sources said. As interest rates soar, DT must cash out and reduced its debt mountain from its current peak of €136 billion. This would free up funds to invest in infrastructure and secure control of its US business T-Mobile, which accounts for 60% of group sales. After Reuters broke the news DT shares fell 1.7%, while Cellnex shares were up 1.7% even as while Spain’s bluechip index Ibex-35 was in the red.