Freenet looks set to acquire Debitel this week

The creation of Germany's third largest cell phone operator will take a significant step towards fruition when, as expected, the private equity company, Permira, agrees to sell Debitel to Freenet for about €1.4 billion in cash and shares. The new company would have around 20 million mobile subscribers.

If the deal is signed, insiders close to the negotiations believe that Freenet will close down a large number of retail stores given the branch network overlap, placing hundreds of jobs in management and administration at risk in both companies.

In an effort to finance the purchase, Freenet still plans to sell its DSL operations, though it is now uncertain whether the company will fetch between €600 million and €700 million, as planned. Permira plans to retain about 25 per cent of the new merged entity.

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