Marconi backs Ipsaris network into Easynet

Marconi, the telecoms equipment maker, yesterday reversed its 92 per cent stake in Ipsaris, a broadband network provider, into Easynet in return for a majority interest in the internet group.

Marconi had been looking to sell Ipsaris, whose fibre-optic network is one of the UK's largest and runs under canals, since last year to avoid competing with its major telecoms customers. Analysts said the deal was largely neutral for Marconi, whose stock closed unchanged at 237p.

The deal valued Easynet at about £475m. Marconi's 72 per cent interest will fall to 60 per cent after Easynet issues 50 million new shares. The telecoms equipment supplier's voting rights will be limited to 49.9 per cent. Marconi also said it will reduce its stake further.

John Mayo, Marconi deputy chief executive, said: "The enlarged listed group will be an independent, well-funded player, well placed to pursue its growth strategy at a time when capital is scarce." Keeping the Easynet name, the new group will have about £310m in cash.

The enlarged group will offer broadband services primarily in Britain and France, though it will look to expand its presence elsewhere on the Continent. The deal will join Easynet's sales force, customer base and sales-led internet business model with Ipsaris's network assets, IT systems and engineering skills.

Neil Rafferty, chief executive of Ipsaris, and Will Gardiner, chief financial officer of Ipsaris, will have those roles at Easynet.

Easynet's shares were suspended yesterday at 427.5p.