Freeserve deal ‘dogged by £1bn tax issue’

In the past fortnight parent company Dixons is thought to have been in talks with both cable giant NTL and Deutsche Telekom subsidiary T-Online about selling its ISP.

Up until now delays in completing the deal are thought to have been down to haggling over the £6bn ($9.2bn) price tag put on Freeserve by Dixons chairman, Sir Stanley Kalms.

However, recent reports suggest the real issue is who will pick up the huge capital gains tax bill once the sale has gone through. This is said to be as much as £1bn ($1.53bn).

Sir Stanley is said to be pushing for frontrunner T-Online to take on the liability. But, it is suggested, the German ISP has in turn countered that it will only offer 500p per share, not 600p, so reducing the sale price to £5bn ($7.65bn).

It is a Mexican stand-off that many analysts believed would have been resolved this weekend, though a settlement is still thought to be imminent. Only on Monday fresh doubts were cast over the willingness of the German ISP to buy Freeserve following a chance remark by chief executive Wolfgang Keuntje, who declared he had not studied Freeserve’s purchase credentials ‘in detail’.

This, though, was thought to be a bluff, and sources close to T-Online later claimed Keuntje’s remarks had been taken out of context.

Either way his remarks were sufficient to put a dent in Dixon’s share price, knocking nine per cent off – in turn strengthening T-Online’s bargaining hand.

This article first appeared on

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