COSMOTE MOBILE TELECOMMUNICATIONS S.A. signed today an agreement with Mr. Panos Germanos, founder and major shareholder of Germanos S.A., and other shareholders to acquire 42% of the outstanding shares of Germanos S.A., at 19 Euro per share, subject to receiving the necessary approvals by the relevant regulatory authorities. Following this acquisition, COSMOTE intends to launch a public tender offer for the remaining shares of Germanos S.A. at the same price, in accordance with applicable Greek legislation. The particular terms of the offer will be announced prior to its launch which is not expected to take place before the end of August 2006.
The acquisition of Germanos S.A., one of the most successful brands and telecommunications retailers in Europe is of major strategic importance to COSMOTE, adding, in one go, the most efficient retail networks in four out of the five countries it operates in and capturing an increasing stake of COSMOTE's operations' value chain. With Germanos' total network of 537 retail outlets in Greece, Bulgaria, Romania and FYROM, COSMOTE will expand its retail presence and further grow its business. Directly addressing its customers, COSMOTE will now be able to promote its commercial strategies through Germanos' successful presence and established brand. In addition to the potential for faster turnover growth, COSMOTE will enjoy increased profitability in the mobile services through concrete financial savings and synergies and reduced operational and market risks.
As part of the transaction, Mr. Germanos has agreed to offer to acquire certain assets from Germanos S.A. which will not be core to the future of the Company, thus releasing value and enabling management to focus exclusively on core business. These assets are the batteries industrial production, including the subsidiaries in Germany, Serbia and the relevant activities in Bulgaria and Romania, and the operations in Poland, Ukraine and Cyprus, except the participation in OTENET Cyprus, where COSMOTE has no presence. The successful Germanos management will continue to be part of the business, adding their expertise across COSMOTE Group. In this context, Mr. Panos Germanos will remain Chairman of Germanos S.A., and, following the public tender offer, will reinvest in Germanos S.A. 10% of the total COSMOTE participation, while Mr. John Karayiannis will remain the CEO of Germanos S.A.
The full gross equity value of the transaction will reach up to 1.58 billion Euro, while the net cost, following the disposals and the reinvestment of Mr. Panos Germanos, will be approximately 1.3 billion Euro. It is estimated that following the sale of Germanos' holdings in Uzbekistan and in Hellenic Duty Free Shops, the company has a net cash position of approximately 100 million Euros. The transaction will be entirely financed by debt.
COSMOTE is confident that the acquisition will offer significant growth opportunities in all countries of common operations and generate increasing returns. Through COSMOTE's pronounced presence, higher profitability per subscriber, consolidation as well as other synergies and savings, the acquisition is expected to be accretive for COSMOTE from the first full year of consolidation, without affecting its dividend policy.
JP Morgan is acting as financial advisor to COSMOTE on this transaction.
COSMOTE's Chief Executive Officer Mr. Evangelos Martigopoulos commented: 'The top mobile operator in S.E. Europe is now joining forces with the best mobile services retail distribution network in the region. This transaction fulfils our investment criteria and is consistent with our strategic priorities, capturing an increasingly important element of the mobile services value chain. With the conclusion of the transaction, following regulatory approvals, COSMOTE will further strengthen its presence throughout South East Europe by addressing directly a much larger consumer base and servicing its customers even more efficiently. We are confident that investing in an established and effective commercial network with strong brand and extensive presence in four markets where COSMOTE operates, will bring us closer to our customers, while further enhancing COSMOTE's growth dynamics and outlook, increasing turnover and generating considerable financial and operational economies and accrue significant value for all our shareholders.'
Mr. Panagis Vourloumis, Chairman of the Board of Directors of COSMOTE and Chairman and CEO of OTE expressed his satisfaction with the successful conclusion of the negotiations and underlined the significance of the agreement for the entire Group.
