The widely anticipated consolidation of the European ISP market
moved forward this week with the announcement yesterday that
Freeserve, the largest ISP in the UK, will be purchased by Wanadoo
of France. Today, Tiscali, the Italian ISP, confirmed that its
purchase of Holland’s World Online will go ahead.
Dixons, the retail group that launched Freeserve in 1998 as the
first ISP operating in the UK without monthly subscription fees,
has for some time made clear its intention to find a suitable
merger partner for its spin-off company. Analysts warned that
without more cash, Freeserve, which saw its revenue follow the
decrease in call costs, could not carry its lead in the UK market
to the continent.
All shares in Freeserve, of which Dixons holds 80%, will be
bought by Wanadoo. Wanadoo is itself owned by France Telecom, which
also owns 22% of NTL. If the deal completes, Dixons will have a
12.7% stake in Wanadoo.
The offer price for Freeserve shares of about 157p (a total
price of £1.6 billion) represents an 11% premium on Freeserve’s
closing price on Tuesday. Freeserve's shares floated in August 1999
at 150p and peaked at 900p.
Tiscali of Italy announced today that its offer for all shares
in the troubled Dutch ISP World Online had succeeded. The value of
the offer is estimated at 5 billion Euros.
Meanwhile, Germany’s T-Online, owned by Deutsche Telekom has
bought Spanish ISP Ya.com. T-Online had proposed a deal with
Freeserve earlier this year, but negotiations broke down in
June.
