LineOne and AOL France up for grabs

Who'd want to be an ISP?

It's an ISP bonanza! LineOne and AOL France are both under the hammer, although one is in distinctly better health. It isn't LineOne - the UK ISP's sale price LineOne has slumped since being put on the market by BT and United News & Media in November, according to those "close to the negotiations".

Italian ISP Tiscali is still favourite to buy LineOne, but although it reportedly offered £200 million for LineOne in January, the FT reports that the price tag has dropped to between £65 million and £100 million. And any sale is more likely to be share-for-share rather than cold, hard cash.

As for AOL France, Vivendi is ready to sell its majority stakeholding (55 per cent) back to AOL Time Warner for around £475 million. Vivendi has become a big competitor to AOL Time Warner recently thanks to various acquisitions - in particular Seagram. Vivendi tried to used the AOL France stake as entry in AOL Europe, but it failed and now it wants out.

Since the AOL/Time Warner merger was cleared, the combined company has been keen to own outright everything with its name in - £475 million is above and beyond what the stake is really worth. The stock market wasn't too impressed though and has knocked a percentage point and a bit off Vivendi's share price.

As for the LineOne deal: since it was expected to be closed by the end of last month, the question is: did Tiscali delay or did BT/UN&M try to hold out (they were known to want £250 million)? Either way, it hasn't worked out for BT/UN&M. Thanks to continuing concerns over Internet valuations, ISPs have never been cheaper.

Tiscali has used this to its great advantage by snapping up loads of well-priced ISPs in just the last year - it is now the second biggest ISP in Europe and all at a fraction of the cost it would have cost, say a year earlier.

Rival companies purported to be still interested in LineOne are T-Online and Wanadoo. Wanadoo now owns Freeserve and T-Online is owned by Deutsche Telekom and so, unsurprisingly, BT has taken a liking to Tiscali.

LineOne has 300,000 subscribers and AOL France 600,000. Yet AOL France is coming in at five times the price. ®

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