Deutsche Telekom sells Strato in €600m deal

By:
James Pearce
Published on:

The German operator bought the web hosting firm for €275m in 2009 but has agreed to offload it to United Internet for more than twice the price

Deutsche Telekom has agreed to sell its web hosting business Strato to German internet service provider United Internet in a deal worth €600 million ($629m).

Strato has more than two million customer contracts and around €130 million in annual revenues, but will become part of United Internet in a cash deal which is expected to close in the first half of 2017 subject to regulatory approval.

The deal will see United Internet make an initial payment of €566 million, then up to an additional €34 million will be paid dependent on meeting undisclosed targets.

Strato has been part of Deutsche Telekom since 2009, when it bought it for €275 million, but has been ran autonomously. During that time revenues have grown from €90 million to €127 million, while EBITDA has increase by €19 million to €49 million.

Detusche said that under the new ownership Strato will continue to provide the Telekom group with hosting for its MagentaCLOUD services, meaning its data will continue to be stored in Germany.

"The acquisition of Strato will enable us to expand our leading market position in the European hosting and cloud application business and drive the consolidation of a market which is currently still strongly fragmented," United Internet chief executive Ralph Dommermuth said.