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Carphone Warehouse agrees £236m purchase of Tiscali UK

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by Kay Mitchell

Carphone Warehouse has today agreed to purchase Tiscali’s UK business for £236 million.

According to Charles Dunstone, Carphone’s chief executive, the deal will make his TalkTalk landline business the UK’s largest home broadband provider – with 4.25 million subscribers.

The deal might also pave the way for the much talked about spin-off of TalkTalk from the mobile phone stores.

Tiscali had previously been in discussions with BSkyB. Tiscali had initially placed the UK business up for sale for £500 million, but BSkyB only offered to pay about £250 million and talks collapsed earlier this year.

Today’s deal has been welcomed by the stock market after Carphone shares rose almost 4% in mid-morning trading while shares in Tiscali were up 8%. Shares in the latter were suspended in Italy, pending the statement.

Tiscali, which is the fifth largest internet service provider in the UK, has been struggling with high debt and low cash flows. Its debt currently stands at €600 million (£535 million).

Mario Rosso, chief executive of Tiscali, said: “The transaction should be considered in light of the strong consolidating trend in the highly competitive UK market, evaluating Tiscali UK activities as a whole, thus preserving the value of its industrial assets and know-how within the Carphone Warehouse Group.”

The deal is expected to be completed by the end of next month.

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Story link: Carphone Warehouse agrees £236m purchase of Tiscali UK

News posted: May 8, 2009

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