Telefonica added another acquisition to its growing European portfolio this week with the planned 100% buy-out of mediaWays, an Internet subsidiary of German media group Bertelsmann. MediaWays will be managed by Telefonica subsidiary Telefonica Data.
The acquisition, valued at $1.6bn (PTS282,000m), forms part of a strategic relationship arising between two of Europe's top media companies. In May, Telefonica Internet subsidiary Terra announced it would carry out a $12.5bn acquisition of US giant Lycos. The new company, Terra Lycos, has signed a $1bn five-year commerce deal with Bertelsmann - Lycos' long-term partner in Europe - which gives it preferential access to Bertelsmann content. Bertelsmann and Terra Lycos have also signed an agreement to jointly develop on-line bookshop, BOL Spain.
But relations between Telefonica president Juan Villalonga and Bertelsmann CEO Thomas Middelhoff appeared to hit turbulence a few weeks ago when Telefonica sent out a press release announcing Bertelsmann/CLT-Ufa's purchase of an 11% stake in Telefonica holding Antena 3 Television before Bertelsmann was ready to announce the deal. The acquisition is reportedly still under negotiation.
Coming on the heels of Bertelsmann's $6.75bn-$8.25bn sale to AOL of its interests in AOL Australia and AOL Europe, the mediaWays deal will mean a healthy infusion of capital for the German group.
MediaWays is the second leading Internet network operator in Germany, behind Deutsche Telekom. Telefonica Data, which offers a variety of Internet services to businesses, boasts a strong presence in Latin America.