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T-Online in Spanish deal
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September 4, 2000: 10:07 a.m. ET
German ISP pays $490M for Ya.com portal, building dominance in Europe
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LONDON (CNNfn) - German Internet service provider T-Online International AG agreed on Monday to acquire Spanish portal Ya.com Internet Factory SA in a cash and shares worth  550 million ($490.2 million), to strengthen its presence in Europe as is takes on rival America Online Inc.
The acquisition comes only days after T-Online's Chief Executive Wolfgang Keuntje resigned, with some media reports saying his departure stemmed from disagreements with its parent Deutsche Telekom AG about international expansion.
Europe's biggest Internet service provider, with more than 6 million subscribers, earlier this year held unsuccessful talks about buying British ISP Freeserve PLC (FRE). The German company first sold shares to the public in April to use as a currency for acquisitions in its own backyard, in the face of competition from AOL (AOL: Research, Estimates) and Yahoo! Inc. (YHOO: Research, Estimates).
 "It's an indication that the company's M&A strategy will continue aggressively without Keuntje," Andrew Moffat, an analyst at ABN Amro, said of the Ya.com deal. "The price they've paid is in line with other takeovers of non-listed ISPs in Europe."
T-Online plans to pay Ya.com shareholders with 15.25 million new shares and 100 million in cash, giving the Spanish company's present owners about 1.25 percent of T-Online. Spanish telecom provider Jazztel, which owns 83.7 percent of Ya.com, will own about 0.9 percent.
Shares in T-Online, majority owned by Deutsche Telekom (FDTE), rose 3.2 percent to 32.75 in mid-afternoon trade Monday. Deutsche Telekom jumped more than 6 percent to 49.
ABN Amro's Moffatt, who rates T-Online a "trading sell," said he did not expect Jazztel to remain a long-term shareholder in T-Online. But he added that any move by Jazztel to sell its stake could depress T-Online shares, which are valued at a premium to other European ISPs.
The Ya.com acquisition, due to be completed in the autumn, plugs T-Online into the Spanish market, where Ya.com ranks number two with some 2.3 million registered customers, of whom 400,000 use it to access the Internet, the German company said. T-Online already has a presence in France and Austria and is soon to begin operations in Switzerland.
"The acquisition looks to be good for them, it opens access not only to the Spanish market but also to the Spanish-speaking world in South America," said Juergen Gries, a trader at Merck Finck & Co. in Munich. 
--from staff and wire reports
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