German ISP United Internet (FWB:UTDI) has said it is considering a potential IPO of its business applications unit within the next two years, to enable it to focus on continued acquisitions.
Following today’s announcement, United Internet shares shot…
German ISP United Internet (FWB:UTDI) has said it is considering a potential IPO of its business applications unit within the next two years, to enable it to focus on continued acquisitions.
Following today’s announcement, United Internet shares shot up more than 6%.
United Internet made the disclosure as it unveiled its latest purchase, Polish webhosting company home.pl, which it has acquired from private equity firm V4C Eastern European for €135m (US$151m). As part of the deal, it assumed the company’s €20m (US$22m) of debt, which will be repaid on closing.
In recent years, United Internet has made other acquisitions in the webhosting and cloud segment, buying InterNetX, Sedo, fasthosts, united-domains and Arsys. That said, its fixed-line and fibre-optic network side of its business is considerably larger.
Commenting on the potential IPO of the business applications division, Berenberg analyst Usman Ghazi saw benefits to a spin-off.
“The logic is that under the current set-up there are dis-synergies with respect to, for example, platform development and speed of decision making,” he said in a note to investors.
“Moreover, some acquisitions in the hosting space could be better facilitated by using shares in a pure-play shared hosting company as an acquisition currency.”
Ghazi estimates the spun-off unit could be worth €2.4bn (US$2.7bn), extrapolating from United Internet’s guidance that the segment will generate €600m (US$670m) in sales this year.
Despite its hosting acquisitions, United Internet’s primary focus is its access business, where it is also looking to expand its network infrastructure. It agreed to buy smaller German rival Versatel last September for an enterprise value of €947m (US$1.24bn), and has made it clear it is looking to play a part in the consolidation of Germany’s broadband market. Its CEO, Ralph Dommermuth, has said it is interested in expanding its fibre-optic footprint, and is less likely to purchase DSL network assets.
United Internet also bought a further 9.1% of Drillisch in April, raising its total indirect holding in the German MVNO to 20.7%.
United Internet said Drillisch was a “well-positioned company with promising market opportunities”, but said it had no plans to raise its equity stake to 30% or more, which would oblige it to launch a mandatory takeover offer, nor to make a voluntary takeover bid.
