Dixons wants to sell Freeserve

Dixons cannot sell its stake in Freeserve before July

Electrical retailer Dixons has confirmed that it is considering selling some or all of its internet subsidiary Freeserve.

Dixons Board confirms that it is considering its options in respect of its shareholding in Freeserve. These may or may not include a sale or distribution of all or part of its holding.

Dixons

Freeserve is Britain's largest internet service provider, and could now become a takeover target for European market leaders like Germany's T-Online.

Dixons currently holds an 80% stake in Freeserve after floating the company on the stock market in 1999.

Dixons is locked into its Freeserve holding until August.

On Monday Freeserve shares closed with a 30 pence gain at 437p, well below its year high of just under £10 pounds.

Shares in Freeserve were boosted last week by rumours that Europe's largest internet service provider T-Online was interested in buying it.

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

High profile

Freeserve was one of the UK's highest profile internet flotations to date.

Its shares peaked at £9.20 earlier this year, valuing the business at £9bn.

However, that value has fallen in recent months following the announcements by competitors NTL and AltaVista that they planned to offer customers unlimited internet access for a flat fee.

Freeserve was a pioneer of offering internet access without subscription fees, funding the service by taking a cut of the telephone call charges incurred by customers.

Shareholders became worried that the firm's revenues would be threatened by the advent of such flat fee access offers.