euro adhoc: Deutsche Telekom AG
Deutsche Telekom AG to Pursue a
Statutory Merger of T-Online International AG into Deutsche Telekom
AG (E)
Disclosure announcement transmitted by euro adhoc. The issuer is responsible for the content of this announcement.
Bonn, 9 October 2004
The Board of Management of Deutsche Telekom AG has decided to pursue
a statutory merger of T-Online International AG into Deutsche Telekom
AG under the German Transformation Act ("UmwG") which involves an
exchange of T-Online International AG shares for Deutsche Telekom AG
shares. Deutsche Telekom AG has been advised by KPMG that, based on a
preliminary IDW-S1 discounted future earnings analysis performed by
KPMG, the merger exchange ratio of T-Online International AG shares
into Deutsche Telekom AG shares based on current expectations of
future developments will be below the exchange ratio implied by
current market prices from the perspective of T-Online International
AG shareholders. Following shareholders approval as required by law,
Deutsche Telekom AG believes the merger to complete in the second
half of 2005.Deutsche Telekom AG has also decided to initiate a voluntary cash tender offer to T-Online International AG shareholders at a cash price of EUR 8.99 per T-Online International AG share in order to provide liquidity and price certainty to all T-Online International AG shareholders who wish to sell their shares rather than wait for the completion of the merger. The voluntary tender offer will not be subject to any acceptance level conditions. Deutsche Telekom AG currently expects to be in a position to publish the offer document for the voluntary tender offer in November of this year, assuming routine regulatory clearances are obtained in a timely manner.
Deutsche Telekom AG also intends to repurchase own shares during 2005 to the extent required to eliminate any increase in the total number of shares outstanding as a result of the merger.
These decisions have been approved by Deutsche Telekom AG's Supervisory Board in a meeting today.
End of ad-hoc-announcement
Issuer's information/explanatory remarks concerning this ad-hoc-announcement:
The rationale for the merger with T-Online International AG
("T-Online") is essential for Deutsche Telekom AGs ("Deutsche
Telekom") new strategy for the development of fixed and broadband
markets in Germany. The introduction of the triple play strategy of
combined voice, internet and TV services to the mass-market is
critical to delivering the next phase of broadband growth in Germany.
An integrated broadband strategy based on voice, internet and TV will
also provide Deutsche Telekom with the capability to introduce
bundled offerings which will drive higher revenues per customer,
increase customer loyalty and significantly improve Deutsche
Telekoms position in the voice market. The integration of T-Online
into Deutsche Telekom provides Deutsche Telekom with the opportunity
to establish optimal and continuous customer relationships, which is
an essential prerequisite for the introduction of combined services
offers. Therefore, it is a strategic aim of the Deutsche Telekom
Group to implement the merger with T-Online as soon as possible.Following completion of the transaction, T-Online will be a critical
part of the new Broadband/Fixed-Line business unit of Deutsche
Telekom with T-Online serving as the product brand for all IP-based
services for the mass market. The T-Online business will remain a
separate organizational unit within the new Broadband/Fixed Line
strategic business unit ("SBU"), with T-Onlines management and
employees playing the key role in driving forward the Groups new
broadband strategy. The new SBU will be governed by an executive
committee chaired by Walter Raizner, and T-Com will be the brand for
the entire SBU.German merger law requires that an independent court appointed merger
auditor ("Verschmelzungsprüfer") review the appropriateness of the
merger exchange ratio from the perspective of both shareholder
groups. As a matter of German merger practice, each company will
appoint an accounting firm to act as appraiser to help ascertain the
exchange ratio. The appraiser performs a discounted future earnings
valuation ("Ertragswertgutachten") of both companies in accordance
with the valuation guidelines known as IDW S1 published by the German
Institute of Chartered Accountants ("Institut der Wirtschaftsprüfer
e.V."). Both German law and practice and the valuation guidelines of
IDW S1 set out clear procedures for the valuations which, in turn,
are required for the determination of the exchange ratio.
Accordingly, Deutsche Telekom has appointed KPMG as its appraiser and
expects T-Online to appoint its own appraiser in due course. Each
party will then have its own appraiser perform valuations in
accordance with IDW S1, with the objective of establishing an
exchange ratio to be reviewed by the court appointed merger auditor.Deutsche Telekom does not expect the merger agreement including the exchange ratio to be available before January 2005.
This document contains forward-looking statements. Forward-looking statements are statements that are not historical facts and are identified by words such as "will," "expects," "anticipates," "plans," "intends," "believes" and similar expressions. Forward-looking statements are based on current plans, estimates and projections, and therefore you should not place too much reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statement in light of new information or future events, although we intend to continue to meet our ongoing disclosure obligations under the U.S. securities laws (such as our obligations to file annual reports on Form 20-F and reports on Form 6-K) and under other applicable laws. Forward-looking statements involve inherent risks and uncertainties, most of which are difficult to predict and are generally beyond our control. We caution you that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. These factors include, among other factors, risks and uncertainties with respect to: our expectations regarding the merger share ratio, the timing and completion of the merger and earnings improvements, synergies and other benefits expected from the merger; the timing and scope of any purchases of Deutsche Telekom AG or T-Online International AG shares by Deutsche Telekom AG; and the risk factors detailed in our Annual Report on Form 20-F as filed with the United States Securities and Exchange Commission.
You are advised to read the prospectus regarding the business combination transaction referenced in these materials, when it becomes available, because it will contain important information. Deutsche Telekom AG expects that a prospectus will be filed with the Securities and Exchange Commission. You may obtain a free copy of the prospectus (when available) and other related documents filed by Deutsche Telekom AG at the Commission's website at 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. When available, the prospectus and the other documents may also be obtained by contacting Deutsche Telekom AG, Attention: Investor Relations, 140 Friedrich-Ebert-Allee, 53113 Bonn, Germany and/or Deutsche Telekom, Inc., Attention: Investor Relations, 101 East 52nd East, 17th Floor, New York, New York 10022
end of announcement euro adhoc 09.10.2004
Further inquiry note:
Hans Ehnert
Leiter Auslandspresse
Tel.: +49(0)228-181-94310
E-Mail: hans.ehnert@teleom.de
Branche: Telecommunications Services
ISIN: DE0005557508
WKN: 555750
Index: DAX, Euro Stoxx 50, Prime Standard
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