America Online targets smaller rival
Thursday 03 April 1997
CompuServe, 80 per cent-owned by the leading US tax accounting firm H&R Block, saw its stock price leap in trading late on Tuesday and again yesterday on industry reports that it was the target of a putative AOL bid.
H&R Block confirmed last night that the two companies were in discussions with a third party regarding a possible business combination involving CompuServe. But it added that there were no assurances that the talks would result in any agreement or transaction.
A successful bid by AOL would inevitably attract close scrutiny by US fair-competition regulators. If allowed, such a deal would transform the on-line provider sector, leaving the field essentially to just two industry giants, AOL itself and the smaller Microsoft Network.
Shares in CompuServe none the less rose 5 per cent in early trading in New York yesterday after leaping a hefty19 per cent in the previous two trading sessions.
H&R Block has made no secret of its desire to spin off the remainder of its holding in CompuServe, which has seen its position as industry leader stolen by AOL. While foreign subscriptions to its service have recently climbed moderately, in the US membership fell to 1.7 million from 1.8 million.
By contrast, AOL, based in Virginia, has seen its customer tally soar to 8 million thanks in part to a policy of carpet-bombing America with free software discs to attract new customers. Tactics have extended to handing out software along with the peanuts on domestic air flights.
An acquisition of CompuServe could help AOL in two vital regards. While strong in the US, it remains weak abroad and would benefit greatly from absorbing the CompuServe customer base in Europe.
A deal would also help AOL overcome widely publicised difficulties in providing enough network capacity to customers.
Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
Shock poll shows voters believe Ukip is to the left of the Tories
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
New era of cheap oil 'will destroy green revolution'
Ukip founder Alan Sked and Nigel Farage 'begged Enoch Powell to stand as a candidate'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
iJobs Money & Business
£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...
£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...
$125 - $175 per annum: Carlton Senior Appointments: Senior Wealth Manager In...
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...