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T-Mobile Netherlands to buy Tele2's Dutch unit

As expected, Deutsche Telekom AG struck a cash-and-stock deal that will allow T-Mobile Netherlands to acquire Tele2 AB unit Tele2 Netherlands.

Under the agreement, Tele2 will get €190 million and a 25% stake in the merged company. Deutsche Telekom will hold the remaining 75% and infuse capital into the merged entity via a €1.1 billion intercompany loan, Deutsche Telekom said.

The combined entity will continue to be known as T-Mobile Netherlands, while still being able to use the Tele2 brand in the Dutch market. Deutsche Telekom expects the enlarged T-Mobile Netherlands to become a "true customer champion" that is able to "compete more effectively" with KPN NV and VodafoneZiggo.

The merged company will be led by a supervisory board composed of three members named by Deutsche Telekom, one by Tele2 and another one from the works council representing employees, Tele2 said in a separate news release.

Before the deal closes, T-Mobile Netherlands will spin off its mobile tower and rooftop assets into a separate entity that will be fully owned by Deutsche Telekom.

The transaction is expected to be completed in the second half of 2018, subject to approval by relevant antitrust regulators. Tele2 will get a €25 million break fee in case the deal failed to secure clearance.

Deutsche Telekom revealed in November that it has been considering merging T-Mobile Netherlands with Tele2 Netherlands. Tele2 President and Group CEO Allison Kirkby, as well as Tele2 Netherlands, remained silent on the matter.