Global investment firm KKR & Co. LP (NYSE: KKR) said it agreed to acquire from Spain’s Telefonica SA (BNMAD/NYSE: TEF; LSE: TDE) a stake of up to 40 percent in Telxius, a critical telecom infrastructure owner and service provider in Europe and the Americas, for €1.275 billion ($1.35 billion). The deal implies an enterprise value of €3.678 billion ($3.88 billion), and is subject to customary closing conditions.

Telxius, created in 2016, is the global telecommunications infrastructure company of the Telefónica Group. It is aimed at capturing the exponential increase in data traffic expected in the coming years. With nearly 16,000 telecommunications towers in five countries, Telxius has one of the most extensive tower catalogues in the market among independent infrastructure companies, making it the market leader in Spain and Germany and one of the main suppliers in the tower sector in Brazil, Chile and Peru.

Telxius owns and operates a large portfolio of nearly 16,000 telecommunications towers in five countries. It also manages an international network with approximately 65,000 kilometers of submarine fiber optic cables, of which around 31,000 kilometers are owned by Telxius. Both business units benefit from attractive growth in their core markets, as the use of mobile data and the demand for reliable internet connectivity continue to grow rapidly, particularly in Spain and Latin America.

KKR will partner with Telefonica to continue to grow and develop Telxius’ leading portfolio, both by optimizing existing assets and investing for growth, including the development of its cable network in Europe and across the Americas through two new submarine cables, one connecting the US and Brazil; the second connecting the US to Europe. Following the deal, Telefonica will remain the anchor client for Telxius’ tower and cable businesses.

Jesus Olmos, Member & Global Co-Head of Infrastructure and Head of Spain at KKR, said: “The combination of Telefonica’s industrial expertise and KKR’s financial and operational support will help Telxius as it continues to scale and grow. We are confident that the exploding demand for mobile data, driven by the rise in 4k and virtual reality content, together with the need for reliable internet infrastructure will help drive strong growth in the business.”

Guillermo Ansaldo, chairman of Telxius, said: “Our vision for Telxius is to capitalize on the exponential increase in data traffic forecast for the coming years by offering a first-class network in Europe and the Americas. We are delighted to have KKR on board as a long-term investment partner. We believe their solid track-record on the infrastructure business will help us achieving our common goals”.

KKR is a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds, with $131.1 billion in assets under management as of September 30, 2016.

The investment will be funded primarily from KKR’s $3.1 illiobn second global infrastructure fund.



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