After further research, I maintain that United Internet’s long-term objective is probably to squeeze out 1&1’s minority shareholders. However, due to the legal and compliance steps required — which typically take up to 12 months, such a move is unlikely before late 2026. Below are the key arguments for and against this outcome.
Arguments for a squeeze-out
- Not planned” statements are not legally binding
When United Internet increased its stake to 90%, it stated that a DPLTA (Dominant Profit and Loss Transfer Agreement) or squeeze-out was “not planned.” However, such statements are considered “forward-looking” and not legally binding . Case law shows many companies (e.g., KUKA, Kabel Deutschland, Schwarz Pharma) reversed such positions without legal consequence. Courts generally require proof of intentional deception, which is difficult to establish. If investors know that these statements are “forward-looking”, it reduces the possibility that United Internet will lose credibility by deviating from its stance.
- Limited strategic rationale for increasing stake to 90% and maintaining it there
United Internet already holds over 75% of 1&1, which enables it to block any shareholder vetoes such as capex increases (threshold: 25.1%). Raising its stake to 90% does not provide significant additional operational or governance efficiencies, but rather eliminates the potential for activist shareholders to cross the 10% voting rights threshold , which would allow them to demand special audits or pursue group litigation. Given that there was no 1&1 activists, this rationale seems weak.
In short, the move is about strategic flexibility and risk reduction, not about day-to-day cost savings or management bandwidth
- Valuation uplift from simplifying the group structure
Berenberg said in September 2025 that their valuation of United Internet carries an 80% discount due to its complex holding structure. It argued that a full buyout of 1&1 minority shareholders followed by a spin-off of IONOS could significantly unlock shareholder value and lead to a re-rating of United Internet shares.
United Internet currently trades on an EV/EBITDA multiple of 6.1 x (Enterprise Value €7.90 bn/ LTM EBITDA €1.296 bn). If a post–squeeze-out re-rating lifted the multiple by 0.5 turns to 6.6x, the extra 0.5x applied to €1.296 bn EBITDA would add roughly €648 million to the enterprise value, an 8.2% uplift.
- CEO’s willingness to increase stake
During the Q4 2024 earnings call, CEO Ralph Dommermuth stated that he remains open to acquiring more shares in 1&1 when opportunities arise — reinforcing the view that a long-term consolidation of ownership is on the table. I think there has been a change in management’s stance when it comes to giving subsidiaries more independence since Dommermuth also stated that they won’t sale more IONOS shares since the business is doing well. IONOS EBITDA margin is twice that of 1&1 yet its revenue is almost three times lower.
- United Internet has loan headroom
United Internet reported 2.2x financial leverage at the end of Q1 2025, with management indicating it was comfortable with up to 3.0x. This provides substantial debt headroom to finance a squeeze-out. Additionally, the EUR 800 million JBIC loan can be used to fund the network rollout, freeing up free cash flow for potential shareholder buyouts.
- Cost synergies post squeeze-out
By removing minority shareholders and delisting 1&1, United Internet could reduce governance, listing, and compliance expenses. I estimate these savings to be around EUR 10 to 20 million per year (guestimates).
Assuming a price of EUR 25.40 per share (around 39% above current levels), and minority shareholders holding around 17.7 million shares , the total cost would be approximately EUR 450 million . At a 3.5% interest rate, this would imply annual interest expenses of EUR 16 million, which could be offset by operational cost savings post-squeeze-out.
Arguments against a squeeze-out
- No immediate tax benefit
1&1 is currently profitable, and it may not incur any significant losses that United Internet could use to offset its tax liabilities through consolidation in the near future. This removes a common incentive used in other holding company structures.
- High capital expenditure requirements
1&1 expects to incur EUR 450 million in CapEx in 2025 for its network rollout. There are also expected costs associated with the low-band frequencies, both next year and in 2029. Given the ongoing uncertainty and capital intensity of the network buildout, United Internet may prioritize stabilizing cash flows and execution before initiating a capital-intensive squeeze-out.
