Tight-fisted Telekom

11 October 2004

DT has just irked the minorities of TOnline by withholding a premium from them when squeezing them out. That will make it easier for this huge sale of its own shares to succeed.

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Germany's KfW, a banking group which warehouses shareholdings on behalf of the state, is selling up to E4bn of shares in Deutsche Telekom.

KfW is selling E3bn of shares via an accelerated bookbuilding offer led Citigroup, JP Morgan and Morgan Stanley. The banks have offered KfW a guaranteed minimum price for its shares. They are marketing the shares to institutions in a price range of E15.05 to E15.20. The stock closed on Friday at E15.22.

The banking group is also selling up to E1bn of warrants exercisable into DT shares. The conversion price of the three tranches of warrants varies in accordance with when they mature.

KfW's holding of DT will fall from 17% of the capital to 10% as a result of the transaction.

DT launched a separate transaction on Saturday that will enable it to squeeze out the minority shareholders of its internet unit TOnline without paying them a premium.

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