* Says deal values Scout24 at 2 billion euros
* Sees closure of the deal in Q1 next year
FRANKFURT Nov 21 Deutsche Telekom
will sell 70 percent of its classified advertising business
Scout24 to private equity firm Hellman & Friedman for about 1.5
billion euros ($2.02 billion).
The deal values Scout24 at 2 billion euros including debt,
the German company said on Thursday. It expects to close the
transaction in the first quarter of next year.
The sale comes almost a year after Deutsche Telekom said it
would look at options for Scout24, a cluster of Internet portals
which includes European car trading site AutoScout24 and real
estate site ImmobilienScout24.
Deutsche Telekom is looking for cash to fund the expansion
of a fourth-generation mobile network that can transport huge
amounts of data to cater for the growing number of customers who
use smartphones and tablet computers.
At the same time it is expanding a fibre-optic network to
offer superfast internet to compete with its cable rivals.
The company said in December last year it expected to invest
almost 30 billion euros between 2013 and 2015.
Deutsche Telekom has not disclosed any results for Scout24
in the past, but a source familiar with the matter said a price
tag of about 2 billion euros would value Scout24 at 20 times the
company's earnings before interest, tax, depreciation and
amortisation (EBITDA) last year.
That looks like a high multiple even for private equity
firms investing in technology and telecom assets, which they
have often acquired at multiples of around 10 times.
However, such a valuation is not unheard of. Shares in peer
Rightmove, a UK property portal, currently trade at 22
times its expected forward EBITDA, according to Reuters data.
The interest of buyout firms in the technology sector is
high as buoyant debt markets have encouraged private equity to
consider larger deals.
Michael Dell this year teamed up with private equity firm
Silver Lake Partners LP to take Dell Inc private for $24.9
"There is so much cheap money out there that investors have
become less prudent," said a Deutsche Telekom top-25 shareholder
who declined to be named.
Deutsche Telekom shares were up 1 percent by 1500 GMT,
outperforming a 0.3 percent gain by an index of European telecom