NewMedia Spark buys GlobalNetFinancial
With its huge pre-tax losses no doubt
VC firm NewMedia Spark is to buy online finance company GlobalNet Financial.
It doesn't want it for its sites, however, which are likely to be shut down if the deal goes ahead. Instead, it's after its stakes in other companies, which mesh nicely with NewMedia's aims - including a nine per cent share in itself.
But in a classic piece of old-skool dotcom madness, NewMedia Spark has also just announced huge pre-tax losses - thanks to the failure of a large number of its online investments. It made a profit of £2.8 million last year. This year it lost £46.3 million. Only a third of its investments are profitable and a fifth have been shut down and written off - to the tune of £73.7 million.
NewMedia still has £76.6 million in the bank however, some of which it will use to grab GlobalNet. GlobalNet has just £7 million left from its IPO fund of £55 million.
GlobalNet hasn't had an easy time of it recently. Following a very successful start - selling financial information to a huge number of portals (its best-known offspring UK-iNvest.com provides Freeserve's financial content) - it has suffered a failed merger with Telescan and shell shock from the dotcom burst bubble [now how do you get shell shock from a bubble? - Ed].
So short of cash is GlobalNet that it has decided to sue Tiscali/World Online claiming that the company misled it with dodgy stats and it wished it had put the £10 million its after somewhere else.
It does however owns some lovely stakes in Internet companies that haven't floated yet. That and 24 per cent of EO, a company whch offers online IPOs. NewMedia Spark already has 10 per cent of EO, so it's edging towards a majority shareholding. GlobalNet also has a joint stake with Freeserve in online share software company Stock Academy.
It doesn't take a genius to work out how these stakes could be usefully tied together. ®