Dixons has finally confirmed that its internet arm, Freeserve, will float on the Stock Exchange, amid applause from the ISPs but frowns from analysts over the valuation.
The retail giant will float a minority stake in its Freeserve operation, as predicted in PC Dealer (27 January). The speculation gathered pace following the the appointment of Credit Suisse First Boston and Cazenove in April to investigate strategic alternatives available to Freeserve, with July being pencilled in for the initial public offering.
The move comes after the continuing success of the free internet access operation that has caused Dixons' share price to surge. The price of Dixons shares when Freeserve launched at the end of September 1998 was about 600p and helped to power Dixons to its 1,564p high in 1999.
However, analysts expressed concerns. One stated that many had valued Freeserve at about £2 billion, although a more realistic float figure would be about £500 million.
'You have to ask what assets Freeserve has - it will be difficult to value. But if it is not in excess of £1 billion then there will be concerns over the amount of value Freeserve has added to Dixons' share price. The Dixons share price may be in for a dip,' he said.
John Pluthero, chief executive of Freeserve, commented: 'This is a significant step in Freeserve's strategic development and represents an important opportunity to continue to build on the quality of content and services that have made Freeserve a leading UK internet portal.'
Matthew Hare, vice chairman of the Internet Service Providers Association, said: 'I think this is excellent news. It means more money will be invested in the sector and this will help grow the industry as a whole in the UK.'
Freeserve has also appointed Nicholas Backhouse as chief financial officer.
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