FRANKFURT (Reuters) - German publisher Axel Springer has agreed to buy internet service provider United Internet's online performance marketing business to create Europe's largest network of its kind and prepare it for a public listing, the companies said on Wednesday.


Performance marketing networks, or marketing affiliates, connect online advertisers and publishers, for which they earn a fee. The bigger they are, the better their technology gets at matching clients.


Axel Springer's Awin and United Internet's Affilinet together have advertising turnover of 718 million euros ($849 million), earnings before interest, tax, depreciation and amortization of 30 million euros and 1,100 employees, mostly software developers and salespeople.


Awin has 6,000 advertisers around the globe, while Affilinet has more than 3,500 advertisers in seven European countries.


Axel Springer will first buy out Swisscom's 48 percent share in Awin for 60 million euros plus interest by exercising a call option, valuing it at 5.2 times 2017 EBITDA.


It will then issue new shares to United Internet to buy most of Affilinet.

Axel Springer will hold 80 percent of the new Awin and United Internet the remaining 20 percent. Awin Chief Executive Mark Walters will head the combined company.

(Reporting by Georgina Prodhan; Editing by Greg Mahlich)