Virtual Internet accepts £12m cash offer

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Jason Drummond, the founder of Virtual Internet, yesterday looked set to walk away with £6.1m after a buyer for the business finally surfaced with an agreed cash offer.

Nasdaq-listed, which had broken off previous talks with Virtual Internet last week, came back with a bid worth 46.8p a share in cash.

Shares in the firm jumped 27.5 per cent, or 9.5p, to close at 44p last night. At the peak of the internet boom in the spring of 2000, the shares had traded as high as £9.90, valuing the firm at just over £250m. Yesterday's deal values Virtual Internet at just shy of £12m, slightly more than the £8.6m of cash the company had at the end of October. The price represents a premium of around 36 per cent over the company's closing share price on Thursday night.

Thirty-something, Mr Drummond, who founded the domain names company in 1996 and is now a non-executive director, owns 50.8 per cent of the shares. He had set up his first business at the age of 15, Micromax, distributing computer software through newsagents. Three years later, he set up another firm, which distributed mobile phones and fax machines.

Virtual Internet had announced it was in bid talks in early December although those negotiations were called off last week due to "issues arising from the due diligence process". Talks were restarted just four days later with the bid surfacing three days after that.

William Slee, Virtual Internet's chairman, said: "Having achieved much in the last few years, particularly with regard to our Net Searchers business, the board considers that the company will be better able to execute its strategy as part of the group, which has greater resources."

Virtual also announced annual results to 31 October, which showed a pre-tax loss of £19.7m compared with a loss of nearly £8m a year earlier. Sales were £9.3m up from £6.3m. The losses take into account a £10.1m goodwill write off and a £370,000 exceptional charge.