Esprit Telecom, which is listed on the Easdaq exchange for European technology companies, has agreed to an all-share takeover by Global TeleSystems (GTS), a US group which financier George Soros helped to fund. The offer values Esprit at $985m.
The move is the first sign of consolidation among the many companies that rushed to grab market share in European telecoms after competition was introduced at the start of the year.
The news sparked a flurry of bid speculation among other telecoms operators. Shares in Colt Telecom, which has built fibre-optic networks in major European cities and is a favourite takeover candidate, jumped 40p to 840p.
"It was a necessary move for Esprit: they do need scale,'' said John Tysoe, analyst at SG Securities. "This makes them look as if they've got a sufficient critical mass.''
Both companies have set up high-speed telecoms networks to carry traffic for other operators and business customers. However, Esprit has grown by setting up sales operations across Europe to attract business customers. GTS has concentrated on building an extensive network based on the Internet Protocol of transferring data. The company has a controlling shareholding in Hermes Railtel, the network set up by Europe's railway companies. Recently GTS announced plans to mimic competitors such as Colt Telecom and WorldCom by building fibre-optic networks in 12 European cities.
"They have put in the bandwidth, while we have the customer base," said David Oertle, Esprit chief executive. "It's natural we should come together."
Shareholders representing 65 per cent of Esprit's share capital, including Apax Partners and Warburg Pincus, the venture capital groups that helped start Esprit in 1992, have agreed to accept the offer.
The move creates a major player in the so-called "carriers' carrier" market - providing high-speed telecoms capacity for other operators - with 60 per cent market share. On latest quarterly accounts, combined annual revenues are around $465m. It will have 3,000 employees and 35,000 customers.
"This market is expected to grow between 50 and 70 per cent over the next five years," said Gerald Thomas, GTS chief executive.
Name Turnover (pounds ) Pre-tax (pounds ) EPS Dividend Pay day X-div
Aberdeen Asset Manag. (F) 48.48m (22.31m) -8.62m (3.59m) 4.10p (2.64p) 4.5p (-) 20.01.99 04.01.99
Avocet Mining (I) 8.002m (17.575m) -3.522m (-0.902m) -6.3p (-2.6p) - (-) - -
Berkeley Group (I) 332.446m (274.032m) 52.520m (43.881m) 29.0p (28.7p) 2.80p (2.65p) 12.02.99 04.01.99
Brewin Dolphin Holdings (N) 48.76m (48.06m) 8.35m (7.22m) 21.7p (20.6p) - ( -) - -
BSS Group (I) 170.65m (159.16m) 7.514m (7.127m) 19.0p (18.1p) 7.5p (7.0p) 15.01.99 14.12.98
BTP (I) 182.6m (216.1m) *22.9m (25.2m) 9.28p (10.53p) 4.33p (4.20p) 11.02.99 01.02.99
Drew Scientific Group (I) 0.968m (1.288m) -0.496m (-0.154m) -1.7p (-0.6p) - (-) - -
Fayrewood (I) 54.119m (20.2918m) 0.961m (0.485m) 2.7p (2.1p) 0.54p (0.50p) 07.04.99 14.12.99
Holmes & Marchant Grp (F) 25.873m (25.746m) 1.194m (1.005m) 4.5p (2.7p) - (-) - -
Hozelock Group (F) 53.9m (52.6m) 4.7m (7.06m) 14.2p (20.1p) 11.3p (11.3p) 12.02.99 04.01.99
Jasmin (I) 3.13m (4.0m) 0.269m (0.279m) 5.80p (6.84p) - (-) - -
John David Sports (I) 68.94m (52.8m) 5.88m (5.52m) 8.60p (8.19p) 2.0p (2.0p) 25.02.99 29.12.98
Landround (F) 3.16m (1.5m) 0.817m (0.391m) 12.4p (5.4p) 5.0p (-) 05.02.99 14.12.99
London Clubs International (I) 79.7m (58.7m) 9.655m (13.469m) 4.2p (6.8p) 2.6p (2.6p) 08.02.99 04.01.99
Orbis (I) 21.8m (17.6m) 1.5m (1.2m) 0.84p (0.75p) 0.38p (0.35p) 26.02.99 14.12.98
Plasmon (I) 20.9m (14.15m) 0.202m (-8.228m) 0.87p (-42.13p) - (-) - -
Prism Rail (I) 246.31m (238.9m) 0.522m (4.175m) 1.6p (11.5p) 4.2p (4.0p) 12.02.99 11.01.99
Scottish & Newcastle Brs. (I) 1.663b (1.678b) 214.5m (224.5m) 26.8p (28.1p) 8.53p (7.93p) 12.02.99 11.01.99
Sutton Harbour Holdings (I) 2.09m (1.63m) 0.357m (0.421m) 3.58p (4.22p) 1.4p (1.3p) 06.04.99 14.12.98
Ultraframe (F) 61.6m (53.6m) 18.8m (11.12m) 14.2p (7.6p) 5.4p (-) 26.01.99 21.12.99
(F) - Final (I) - Interim (Q) - Quarterly (SP) - Split Period (N) - Nine Months *Before ExceptionalsReuse content