Freeserve Shares Surge on Speculation of Pounds 6.5bn Bid from Deutsche-backed T-Online

Strategic Insights -

Dealers returned to their desks in London after the bank holiday weekend to find Freeserve shares marked up sharply on speculation that a 650p per share bid from Deutsche-backed T-Online was imminent. Although both German companies refused to comment on the reports, Deutsche senior vice-president Thomas Winkler confirmed that T-Online was searching for acquisitions, fuelling speculation. Freeserve has been at the centre of intense takeover speculation since the start of this month, with analysts believing that a deal with T-Online would give both companies a much-needed pan-European presence, generate significant cost savings, and allow a combined critical mass of users.

Key Takeaways:

  • The Deutsche-backed T-Online is reportedly preparing a Pounds 6.5bn bid for Freeserve, sparking a 24% surge in Freeserve's share price.
  • Deutsche senior vice-president Thomas Winkler confirmed that T-Online was searching for acquisitions, adding fuel to the takeover speculation fire.
  • Freeserve has been the centre of intense takeover speculation since the start of this month, with analyst consensus that it will be sold to the Deutsche-backed T-Online rather than the cable company NTL, British Telecommunications, or Energis.
  • Analysts believe a deal between Freeserve and T-Online would give both companies a much-needed pan-European presence, generate significant cost savings across technology platforms, and allow a combined critical mass of users.
  • Peter Misek, an internet analyst at Chase H&Q, said a deal between Freeserve and T-Online makes a lot of sense, citing the potential benefits of a combined entity.
  • Dixons has promised not to sell any of its shares in Freeserve before June 27, but observers believe the stock exchange may wave through a bid before that date if it represents a healthy premium for Freeserve shareholders.

Statistics:

  • Freeserve shares surged 95p to close at 487p.
  • Dixons shares rose 28.5p to close at 302p.
  • The takeover bid speculation resulted in a 24% surge in Freeserve's share price.
  • Deutsche-backed T-Online is reportedly planning a Pounds 6.5bn bid for Freeserve.
  • Freeserve's shares have traded as high as 950p this year, before recent turbulence in the tech sector.

Sources:

  • "Byline: John Cassy Deutsche Telekom and its majority-owned subsidiary, T-Online, yesterday proved that silence can be golden when their refusal to deny rumours that the latter is preparing a Pounds 6.5bn bid for Freeserve prompted a 24% surge in the internet service provider's share price." - The Guardian
  • Special report on e-finance: www.guardianunlimited.co.uk/efinance