KPN Sells E-Plus to Telefonica

AMSTERDAM--Royal KPN N.V. (KPN.AE) said Tuesday it will sell its German mobile E-Plus business to a unit of Spanish telecom group Telefonica SA (TEF.MC), in a deal that values the unit at 8.1 billion euros ($10.7 billion) and will create Germany's largest mobile-phone operator.

The Dutch telecom company will receive 5 billion euros in cash and a 17.6% stake in Telefonica Deutschland.

The deal comes after months of speculation about a possible tie-up of the companies' German units, which should enable them to better compete with the top two telecom operators there, incumbent Deutsche Telekom AG (DTE.XE) and Vodafone Group PLC (VOD).

Telefonica Deutschland, in a statement, confirmed the purchase of KPN's German unit.

The combined firm will have annual revenues of over 8 billion euros and total synergies are estimated to reach 5.0 billion to 5.5 billion euros, the companies said. Completion of the transaction is dependent upon regulatory clearance and approval by KPN shareholders.

Write to Robin van Daalen at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires