United Internet AG has decided to cease further investments in Kublai GmbH, which currently owns approximately 95% of Tele Columbus AG shares.
United Internet has chosen to forgo its right to increase its stake in Kublai back to 40%, following a dilution to about 5% due to a capital increase in the first quarter of 2024. Consequently, United Internet anticipates a non-cash impairment loss of around EUR 185 million on its Kublai investment, to be reported in its Half-year Financial Report 2024.
Previously, in its Interim Statement Q1 2024, United Internet disclosed that Kublai had conducted a capital increase to provide equity for Tele Columbus, which United Internet did not partake in. Hilbert Management GmbH, an indirect subsidiary of Morgan Stanley Infrastructure Inc. (MSI), fully subscribed to the EUR 300 million capital increase, resulting in the dilution of United Internet’s stake in Kublai from 40% to about 5%. United Internet had an option, until June 17, 2024 (previously June 6, 2024), to restore its 40% stake by purchasing shares from MSI for EUR 120 million.
United Internet believes that the valuation of Tele Columbus AG, which the capital increase was based on, is significantly undervalued, leading to excessive dilution of its shares. Despite this, MSI, with its majority vote at the shareholders’ meeting, proceeded with the capital increase based on its valuation. United Internet plans to initiate anti-dilution proceedings and will request an arbitration court to review MSI’s valuation. If the court supports United Internet’s view, based on an independent valuation before the capital increase, United Internet is entitled to compensation of approximately EUR 300 million.
The decision by United Internet AG’s Management and Supervisory Boards to halt further investments in Kublai stems from differing opinions with MSI regarding Kublai’s future financing.
