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.