The Management and the Supervisory Boards of German mobile operator Drillisch have described an offer by United Internet (UI) for shares in their company as “adequate” as they look to settle a complicated takeover deal.
UI agreed to merge its 1&1 Telecommunication subsidiary with Drillisch last month.
Despite agreeing that the overall deal offers “considerable potential for value creation”, Drillisch board members have refrained from offering a recommendation to shareholders about whether to accept UI’s offer, which prices in a premium of 8.3 percent.
“Each Drillisch shareholder must decide on their own whether to accept the offer or not, taking into consideration the circumstances and their personal situation,” they said in a statement.
The share offer is the second-step in a takeover that began with UI transferring a 7.75 percent stake in 1&1 to Drillisch, and receiving over nine million new Drillisch shares in return.
This first step, which completed on 16 May, saw UI up its stake in Drillisch from 20 percent to 30 percent.
The new share offer that has received a lukewarm reception from Drillisch proposes that the remaining 92.25 percent stake UI holds in 1&1 is exchanged for more Drillisch shares, making UI the majority shareholder in Drillisch with 72.7 percent.
Drillisch shareholders will get to have their say in a vote at an extraordinary general meeting on 25 July.
Should it get the green light, alongside regulatory approval, the combined business would become Germany’s fourth largest operator behind Deutsche Telekom, Vodafone and Telefónica.
1&1 has 8.7 million fixed and mobile customers, while Drillisch has 3.5 million mobile customers.
Drillisch and UI have pencilled in annual savings of €250 million by 2025 and hope to close the deal by the end of 2017.
Speaking last month, UI Chief Executive Ralph Dommermuth said: "With the merger of 1&1 Telecommunication and Drillisch, we are creating a powerful telecommunications provider under the umbrella of United Internet.
“1&1 possesses a strong brand, an enormous customer base and immense distribution capability.
“Drillisch is a fast-growing mobile telecommunications provider with an attractive product portfolio.
“Together, we can offer our customers the complete range of products with full access to the network technologies of today and tomorrow from a single source: high-speed DSL, mobile internet and the associated services.”