Deutsche Telekom to sell tower business to N. American consortium

Deutsche Telekom will sell 51% of its tower business to a consortium of Canada’s Brookfield and private equity group DigitalBridge Group Inc after they placed a surprise bid, Handelsblatt reported on Wednesday, citing unnamed corporate sources.

The decision was made by Deutsche Telekom’s supervisory board on Wednesday and will be announced on Thursday, the paper reported. Deutsche Telekom will retain the remainder of the stake.

The new consortium follows the withdrawal early on Wednesday of Spain’s Cellnex, which had been teaming up with Brookfield and was seen as a top contender for a stake. read more

If indeed successful, the bid would knock out a competing offer by a consortium led by KKR & Co Inc.

Deutsche Telekom, which declined to comment on an earlier Handelsblatt report about the new bid and its good chances of success, did not immediately respond to a request for comment outside business hours.

A source familiar with the discussions told Reuters that DigitalBridge had been looking to team up with another financial investor since the start of the auction but the U.S. investment firm was struggling to form its own bidding consortium.

A transaction would rank as Germany’s biggest deal this year and Europe’s second-largest, after the Benetton family and U.S. fund Blackstone Inc’s 58 billion-euro takeover of Italian infrastructure group Atlantia.

The business has been valued at around 18 billion euros, Reuters has reported.

The sales process, which kicked off in March, has attracted competition by strategic bidders and infrastructure funds for a stake in the masts unit known as Deutsche Funkturm GmbH (DFMG).

The deal is expected to help the German telecoms company raise enough funds to cut its debt while keeping some exposure to key infrastructure. Reuters