Freeserve gains ground on T-Online rumours

Shares in Freeserve jumped 15 per cent yesterday on speculation that Britain's leading internet service provider has renewed discussions with T-Online, the German internet rival with which it held abortive takeover talks last month.

Shares in Freeserve jumped 15 per cent yesterday on speculation that Britain's leading internet service provider has renewed discussions with T-Online, the German internet rival with which it held abortive takeover talks last month.

Freeserve shares rose 49p to 381p despite attempts by the company to dampen down the latest bout of takeover whispers.

It said nothing had changed since last month when it issued a statement saying that although talks were continuing with various parties none was expected to lead to a takeover.

Freeserve's previous talks with T-Online centred on a possible 600p per share bid for Freeserve, which would have valued the company at £6bn. However, the talks collapsed on cultural and management issues.

Tarek Robbiati, an internet analyst at Lehman Brothers, said speculation around Freeserve would continue as it is one of the few sophisticated portals in Europe, operating in one of the largest economies. "We are going to have to get used to this kind of speculation," he said.

Freeserve has made no secret of the fact that it is still in talks with T-Online. However, these talks and others with companies like the US cable company NTL, are thought to centre on partnerships and alliances rather than a full bid.

Dixons, the electrical retailer, controls 80 per cent of Freeserve's shares. Under the terms of Freeserve' listing particulars, Dixons can sell half its stake following Freeserve's first full-year results statement, which were announced last month. The remainder of the stake can be sold after 26 June next year. Dixons has been keen to reduce its stake to reduce volatility in its share price.

Dixons shares closed 22.5p higher at 296p.