Bargain basement time for France Telecom-controlled ISP Wanadoo!

Its all-share acquisition of FreeServe is seen as a coup for the French company, whose £1.62 billion offer was accepted with alacrity by the Dixons Stores Group board, relieved to be rid of the ISP after a nine month search for a buyer.

FreeServe chief executive John Pluthero was defensive about the numbers. The sale price, he insisted, “was the best deal we could do for shareholders … I am convinced that people who want internet stocks and want to own internet stocks that are performing in the UK will welcome this deal.” The markets, however, were less enthusiastic and shares in Dixons fell 16p to 235p.

The purchase will create Europe’s second-biggest ISP after Germany’s T-Online. It also enables Dixons to realise its investment in FreeServe by phased selling of its newly-acquired Wanadoo shares. The cash would be used, said Dixons, to “grow as Europe’s leading electrical consumer goods retailer”.

Wanadoo chairman and chief executive Nicolas Dufourcq said the deal would help the French company achieve its goal of ten million subscribers by 2003. Currently, the combined tally is around four million.

News source: The Times (London)