Energis to Buy 75% of Germany's Ision for EU812 Mln (Update3)
By Christine Harper
London, Dec. 19 (Bloomberg) -- Energis Plc, Britain's largest carrier of Internet traffic, said it will buy 75 percent of Ision Internet AG for 812 million euros ($725 million) in cash and shares to expand into faster growing businesses such as Web-site management.
The London-based company will pay 210 million euros in cash and 602 million euros in new Energis shares to Distefora Holding AG for the stake in Germany's largest independent Web-site management service, whose clients include Commerzbank AG, Deutsche Bank AG, and Bertelsmann AG.
Telecommunications companies such as Energis and Cable & Wireless Plc are adding services such as storing information and managing Web sites for business customers in Europe. They need to maintain revenue growth as competition erodes prices in businesses carrying voice and data.
``Strategically it make a lot of sense,'' said Phil Campbell, an analyst at Schroder Salomon Smith Barney who recommends buying Energis shares up to 800p. ``Energis has got a very, very good position in the U.K. and it's building its position in Europe'' to compete with rivals.
Energis shares fell as much as 42 pence, or 8.4 percent, to 457.5p. Ision's shares fell as much as 3 euros, or 6 percent, to 47 euros.
Unprofitable
In the nine months to Sept. 30, Hamburg-based Ision had 66.7 million euros in sales and lost 11.2 million euros before interest, taxes, depreciation and amortization. The purchase price represents a premium of 10 percent to Ision's market value of 932 million euros yesterday.
``Ision is a look-alike'' of our U.K. businesses in Europe, said Mike Grabiner chief executive of Energis in an interview. ``It significantly strengthens our position in Germany and Holland and a 10 percent premium is a small price to pay for what it brings us.''
The purchase, which requires German regulatory approval, is likely to be completed by the end of January, Energis said. It funded the cash part of the transaction from money raised in a share sale in September. Ision has 900 employees.
Distefora, a former Swiss electronics retailer that now invests in Internet-related businesses, cannot sell its Energis stake for another nine months without Energis's consent.
Energis shares had fallen 16 percent this year until yesterday. Ision's shares had fallen 28 percent since their initial public offer at 69 euros each in March.
Energis said it will offer to buy out Ision's minority shareholders, as required by German takeover rules.
Dresdner Kleinwort Benson advised Energis. ING Barings advised Distefora.
(A conference call will be held at 3 p.m. London time on 44- 20-8781-0596. Ask for the Energis call hosted by Chris Hibbert.)