France’s Wanadoo makes takeover bid for U.K.’S Freeserve

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PARIS - Leading French Internet Service Provider Wanadoo has launched a friendly takeover bid against U.K.-based ISP Freeserve that would make Wanadoo one of Europe's three largest Internet firms.

If approved by shareholders, the $2.2 billion all-share merger would give rise to a pan-European Internet giant with more than 4 million clients in a half-dozen countries across the Continent. Strategically, it will also move Wanadoo, controlled by state-owned France Telecom, much closer to its stated goal of 10 million ISP clients worldwide by 2003.

The key element of the proposed Freeserve buy-out is that it would offer Wanadoo a toehold in the U.K., Europe's second-largest Internet market after Germany. The French firm would acquire Freeserve's 2 million-strong customer base, which has seen the firm become the top ISP and third-leading portal site in the U.K since its 1998 launch.

Consumer electronics giant Dixons, which controls 80 percent of Freeserve, would receive a 12.7 percent stake in Wanadoo, making it the largest shareholder in the French ISP.

Analysts applauded the Wanadoo-Freeserve merger proposal, which is seen as creating a new company with strong operations across the spectrum of Internet business operations.

In the ISP market, the enlarged group will have strong distribution capacities, relying on the combined sales and distribution networks of Wandadoo, Freeserve, France Telecom and Dixons.

In the portal market, the enlarged group will have the opportunity to enhance the quality and depth of content and e-commerce operations, particularly through expansion of Wanadoo's English-language offer.

On the advertising side, the enlarged group will record more than 545 million monthly page views, and is thus seen as offering enhanced online revenue prospects.

Copyright December 2000, Crain Communications Inc.

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