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Monday, 11 June, 2001, 09:28 GMT 10:28 UK
New owner for Breathe
Scene from a Breathe television advert
Breathe spent millions on television advertising
Breathe, the UK's fourth biggest internet service provider, has been sold to Britain's Affinity Internet Holdings.

The deal comes just six months after the ISP was rescued from the brink of bankruptcy by retail giant Great Universal Stores (GUS).

The deal was concluded at 1.75m and will be settled by the issue of 533,537 shares at 3.28.

GUS, which owns the Argos retail chain, bought the assets and technology of the business for 1.4m in January.

Breathe, controlled by mobile phone entrepreneur Martin Dawes, collapsed in December with losses of about 50m ($74m). It went into administration after hitting financial problems.

Technology potential

GUS originally said they were more interested in Breathe's technology and management than its future potential as an ISP.

But it continued to provide internet access to Breathe subscribers.

Breathe facts
650,000 registered users
20m page impressions/month
Q1 2001 loss 1.7m
GUS has now sold the software, hardware and customer database, but has retained the intellectual property to technology which allows multiple device access to the internet.

The retail giant originally planned to use Breathe's technology to help it expand its capabilities in the remote shopping market.

Affinity says they will offer Breathe customers a "significantly enhanced service" by providing personalised portals.

Stranded

The cost of maintaining the internet service proved unsustainably high for Breathe, which was once rumoured to have a potential flotation value of 100m.

Breathe's expansion plans faltered because of a slower than expected take-up of Wap (wireless application protocol) enabled phones.

The deterioration in investor sentiment towards the dot.com sector left it unable to secure fresh funding.

Breathe has over 650,000 registered users and gets around 20 million page impressions every month.

Unaudited management figures for the first three months of the year show the business making a loss of 1.7m.

Affinity Internet Holdings provides branded internet access, telecommunications and online entertainment in the UK, and is now expanding into Australia, Africa and wider Europe.

Affinity made a pretax loss of 6.629m in the first three months of the year.

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See also:

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