* United Internet to buy KKR's 74.9 pct stake for 586 mln
* Deal will raise United Internet's holding to 100 pct
* Purchase indicates shift in strategy
* United Internet shares rise 3.7 percent
(Adds synergies, share price)
FRANKFURT, Sept 3 United Internet
agreed on Wednesday to buy KKR's stake in cable group
Versatel for about 586 million euros ($769 million) in cash,
giving it access to Germany's second-largest fibre optic cable
The move indicates a shift in strategy for the German
internet service provider, which has until now rented bandwidth
and resold it using its 1&1 or GMX brands but has not invested
in a grid on its own.
The purchase of the 74.9 percent of Versatel it does not yet
control will give United Internet access to a fibre optic cable
network that can be accessed in 19 of Germany's top 25 cities.
It will raise United Internet's number of DSL broadband
customers to 4.12 million from 3.68 million at the end of June,
cementing its position as the country's second broadband
provider after Deutsche Telekom.
United Internet said it would keep the Versatel brand and
further expand its business with corporate clients.
It also plans to use its cable network to offer DSL
connections to its customers, which it said would generate
savings of up to 55 million euros a year.
Shares in United Internet rose 3.3 percent to 33.92 euros by
0904 GMT, touching their highest level in more than two months
earlier in the session. Germany's technology index was
up 1 percent.
Berenberg analyst Usman Ghazi called the deal "a steal" for
United Internet. "The multiples are attractive, the synergies
are sensible and can be delivered with relatively low risk, and
there is strategic rationale," he wrote in a note.
United Internet plans to fund the purchase of KKR's stake in
Versatel and repayment of Versatel's 361 million euros of net
debt with new loans.
United Internet said accounting changes due to the full
consolidation of Versatel would lead to one-time, non-cash
income of about 100 million euros in fiscal year 2014, after
Versatel expects to post flat 2014 revenues of about 548
million euros and a 6 percent increase in earnings before
interest, tax, depreciation and amortisation (EBITDA) to about
164 million euros.
($1 = 0.76 euro)
(Reporting by Maria Sheahan; Editing by Matt Driskill and