European giant 'targets' Freeserve

Freeserve was one of the UK's high profile internet floats

Europe's largest internet service provider T-Online wants to buy Freeserve, the UK's biggest internet company.

T-Online, which is majority owned by Germany's Deutsche Telekom, is considering making an approach to Freeserve, according to a report in the Independent on Sunday.

A merger would lead to the creation of one of the world's largest internet service providers with nearly 7 million registered users.

It is unclear how Freeserve would respond to a friendly approach from the German company, but its share prices are likely to be boosted by the speculation when share trading resumes on Tuesday.

T-Online have previously made it clear they want to expand in Europe.

Share price soars

Since it was floated earlier this month, the company has managed to evade much of the recent market turbulence.

It floated at 28.5 euros per share, at the lower end of investor expectations, and closed on Friday at 41 euros per share.

By the end of March, T-Online boasted 5.3m customers, up from 4.2m at the end of 1999.

Deutsche Telekom already has established a presence in the UK - it owns One2One, the UK's fourth largest mobile telephone company.

If it takes over Freeserve, it will leapfrog into top position in the UK internet access market.

Freeserve has been one of the UK's highest profile internet flotations so far.

Since electrical retailer Dixons sold off 20% of the company in July last year, its shares have peaked at 920 pence earlier this year, valuing the business at £9bn.

The shares have since fallen back and closed at 360 pence on Friday, valuing it at £3.6bn.