[London, ENGLAND] Shares were suspended in
Tiscali S.p.A. and
World Online International N.V. on
Thursday, pending announcement of a merger of the two European ISPs.
Tiscali, “The European Portal,” with operations in Belgium, France,
Germany, Italy and Switzerland, will absorb cash-rich, equity-poor
World Online to create a European Internet access company second
only in size to Germany’s T-Online.
A brief statement heralded the later announcement, saying: “The Boards
of Tiscali S.p.A. and World Online International N.V. announce that
expectation is justified that agreement can be reached on a proposed
combination of the two companies.”
Speculation about the forthcoming merger has been rife, ever since
the press got wind of exploratory talks between the two companies
in early August. At the time, World Online said it was in on-going
discussions with several potential partners, but admitted that one
of them was Tiscali.
The merger is a marriage of convenience, as Tiscali’s shares have
been relatively high, while in comparison to World Online the
company is cash-poor. World Online on the other hand has around
US $1.6 billion in cash from its flotation, but with its share price
in collapse it could not achieve its pan-European ambitions without
a partner.
Under Chairman James Kinsella, who was appointed following the
resignation of Nina Brink, World Online changed its policy to
concentrate on building up its infrastructure, supplying services
to other ISPs. The policy may well have saved the group which
at the height of Brink’s resignation scandal appeared doomed.
Tiscali, founded by Renato Soru as recently as January 1998,
expanded its regional telephone and Internet operations rapidly,
launching Italy’s first free Internet access service in March
1999. Via its subsidiary Nets S.A. it has begun to invest
US $130 million into a high speed fiber-optic backbone network
linking cities in two loops across northern and southern Europe.
As a combined company, Tiscali and World Online will be well
positioned to compete with Deutsche Telekom’s T-Online and
bid for third generation mobile licenses.
