T-Online International AG
Deutsche Telekom and T-Online Agree On Exchange Ratio
Ad hoc announcement §15 WpHG
Merger
Deutsche Telekom and T-Online Agree On Exchange Ratio
Ad hoc announcement transmitted by DGAP.
The issuer is solely responsible for the content of this announcement.
——————————————————————————
Deutsche Telekom and T Online have today reached a definitive agreement
regarding the exchange ratio in connection with the planned merger of T Online
International AG into Deutsche Telekom AG. Accordingly, T-Online shareholders
will receive 0.52 Deutsche Telekom shares for one T-Online share, i.e. 13
Deutsche Telekom shares for 25 T-Online shares.
The exchange ratio was determined on the basis of the company valuations
conducted by Deutsche Telekom and T-Online, with the assistance of KPMG and
Warth & Klein, who were mandated by Deutsche Telekom and T-Online,
respectively, to support the preparation of the company valuations on the
basis of the applicable discounted earnings methodology
(Ertragswertverfahren). The equity value (Unternehmenswert), as determined in
accordance with the draft of the new version of the valuation standards
issued by the Institut der Wirtschaftspruefer in Deutschland e.V. (IDW ES1
neue Fassung), amounts to EUR 28.31 per share for Deutsche Telekom, and to EUR
14.71 per share for T-Online.
The equity values of both Deutsche Telekom and T-Online are based on the most
recent medium- and long-term business plans, as prepared by Deutsche Telekom’s
and T-Online’s Management Boards, as well as on the audited consolidated
group balance sheets for Deutsche Telekom and T-Online as of 31 December 2004.
The following table sets forth some of the key valuation parameters and
planning assumptions used to establish the equity values of Deutsche Telekom
and T-Online.
Overview of Key Assumptions for the Analysis
Key Assumptions
Deutsche Telekom Group T-Online Group
Annual discount rates used 7.57-8.55% 9.35-9.42%
after typified shareholder income tax,
before growth rate deduction)
Risk- free rate before typified 5.0% 5.0%
shareholder income tax
Beta factor unlevered 0.72 1.10
Market risk premium after 5.5% 5.5%
typified shareholder income tax
Typified shareholder income tax rate 35% 35%
Key figures forecast period 2005-2014E
Sales 2005E/2014E in billion EUR 61.1/84.8
2.5/10.3
EBITDA 2005E/2014E in billion EUR 20.8/29.7
0.3/2.4
EBT 2005E/2014E in billion EUR 7.6/19.7
0.2/2.4
Group net income 4.9/11.5 0.1/1.5
2005E/2014E in billion EUR
Dividend payout ratio 2005E/2014E 53%/50% 39%/37%
Typified shareholder income 17.5% 17.5%
tax rate for dividend payments
Debt to equity ratio used 2005E/2014E 44%/13% 1%/1%
Terminal value assumptions 2015 onwards
EBITDA in billion EUR 30.5
2.5
EBT in billion EUR 19.3
2.5
Group net income in billion EUR 11.2
1.5
Debt to equity ratio 12% 1%
Perpetuity growth rate 2.0% 3.5%
End of Ad hoc Release
The parties expect that the merger agreement will be notarized in the course
of today. The merger agreement and the joint merger report of the Management
Boards of Deutsche Telekom and of T-Online, including the detailed planning
assumptions and company valuations of both Deutsche Telekom and T-Online, will
be available online at [http://www.t-online.net/ir] shortly.
The shareholders of T Online and, if required, Deutsche Telekom will vote on
the merger agreement at the annual general meetings at the end of April 2005.
As of the calling of the annual general meetings to vote on the merger, the
merger agreement, the joint merger report and the merger audit report of
Ebner, Stolz & Partner, the independent court-appointed auditor, as well as
other documents as required by law will be available for inspection and copies
will be sent to the shareholders of Deutsche Telekom and T-Online upon their
request.
T-Online International AG
T-Online-Allee 1
64295 Darmstadt
Deutschland
ISIN: DE0005557706 (TecDAX)
WKN: 555770
Listed: Geregelter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin-
Bremen, Düsseldorf, Hamburg, Hannover, München und Stuttgart; Eurex
End of ad hoc announcement (c)DGAP 08.03.2005
Issuer’s information/explanatory remarks concerning this ad hoc announcement:
Important disclaimer
The calculation of a company valuation on the basis of the discounted ear-
nings methodology (Ertragswertmethode) is a highly complex process and is not
necessarily susceptible to partial analysis or summary description. The analy-
ses performed by the management boards with the assistance of KPMG and Warth &
Klein are not necessarily indicative of future results or actual values
derived in accordance with other valuation methodologies, which may be signi-
ficantly more or less favorable than those expressed in this ad hoc release.
These analyses involved numerous judgments and assumptions with regard to
industry performance, general business, economic, competitive, market and
financial conditions, many of which are beyond the control of the companies,
as well as judgments and assumptions regarding “risk-free rates”, “beta
factors”, “market risk premia” and “typified shareholder income tax rates”,
“dividend payout rates”, “debt to equity ratios” and “terminal values”, all
of which involved the exercise of discretion on the part of management.
Further information regarding the calculation of the company valuations will
be provided in the merger report and merger auditor’s report described above.
This ad hoc release contains forward-looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. It is important to
note that Deutsche Telekom’s or T-Online’s actual results could differ
materially from the results anticipated or projected in any such forward-
looking statements, based on a number of important factors. Deutsche Telekom’s
filings with the U.S. Securities and Exchange Commission contain cautionary
statements identifying important factors affecting such forward-looking
statements, including certain risks and uncertainties that could cause actual
results to differ materially from projections contained in any forward-looking
statements made by the company. Neither Deutsche Telekom nor T-Online
undertakes any responsibility to update such forward-looking statements in
light of future events or developments. The statements on the company
valuations on the basis of the discounted earnings methodology (IDW ES 1 new
version) do not constitute a forecast or assumption of the future development
of the market prices of shares of Deutsche Telekom or T-Online.
You are advised to also read the U.S. prospectus regarding the business
combination transaction referenced in these materials, when it becomes
available, because it will contain important information. Deutsche Telekom has
filed a preliminary prospectus with the Securities and Exchange Commission.
You may obtain a free copy of the preliminary prospectus or the final
prospectus (when available) and other related documents filed by Deutsche
Telekom AG at the Commission’s website at http://www.sec.gov , at the SEC’s
public reference room located at 450 Fifth Street, NW, Washington D.C. 20549
or at one of the SEC’s other public reference rooms in New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. The preliminary prospectus, the
final prospectus (when available) and the other related documents may also be
obtained by contacting Deutsche Telekom AG, Attention: Investor Relations, 140
Friedrich-Ebert-Allee, 53113 Bonn, Germany.
End of message (c)DGAP
081430 Mär 05
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