(WEB HOST INDUSTRY REVIEW) — Telecommunications provider Deutsche Telekom (www.telekom.com) announced on Thursday it will acquire Web hosting provider Strato (www.strato.eu) from German telecom services provider Freenet (www.freenet.ag).
The teleco will purchase all shares of Strato AG and Strato Rechenzentrum for a total of $409 million (EUR 275 million). The supervisory boards of both Deutshe Telekom and Freenet have approved the deal and the transaction is awaiting approval by the competition authorities.
Strato has more than 1.3 million customers in six European countries, making it the second largest German Web host and one of the largest Web hosts in Europe.
Freenet has been shopping Strato to potential buyers since June, when it announced it was looking to sell off the Web hosting division.
Over the past few months, a handful of companies have come up as potential buyers, including German ISP United Internet, French hosting provider OVH, German investment bank Warburg Pincus and private equity firm Bridgepoint.
In May, Freenet sold its DSL business for $172 million to United Internet’s subsidiary 1&1 Internet, based on a preferred distribution partnership.
By selling off Strato and other non-core units, Freenet is now able to reduce its existing debt.
The teleco gained more than EUR1 billion in debt when it purchased mobile communications firm Debitel last year.
With its range of IT solutions, Strato complements Deutsche Telekom’s activities in the hosting area. Strato provides hosting for email, websites, blogs, and online shops as well as data storage services on physical and virtual servers, for consumers and small businesses.
The company currently operates about 4 million hosted domains and has 502 employees.
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