The fight for one of Britain’s last independent broadband bases got under way today when Pipex instructed UBS to advise it on a £300 million-plus sale.
BSkyB, Carphone Warehouse, BT and Orange are among buyers expected to compete for the business, which has more than 570,000 residential and small business broadband customers.
BSkyB is 39.1 per cent owned by News Corporation, the parent company of The Times.
BT is known to have spent time last year looking over Pipex, which was one of Britain’s first internet providers.
Pipex, whose shares closed 14 per cent higher on Friday, were trading 1.8 per cent down at 13 and 3/4p by mid-morning, giving it a market value of about £330 million.
Peter Dubens, the chairman of Pipex, is said to have set his sights on an offer of between 16p and 22p a share.
Further consolidation in the broadband sector has long been predicted as the bigger players seek to scale up their customer bases to make their operations more effective.
The Times revealed in January that Mr Dubens had effectively kicked-off the sale process by launching a review of the business.
Analysts said then that staying in the market would have forced him to continue with significant investment in areas such as marketing in an effort to keep up with bigger, better-resourced high street rivals.
Last year Carphone Warehouse saw off stiff competition from Orange and BSkyB to acquire AOL UK's broadband business in a £370 million deal.
The sale of Pipex could be complicated by its components — the business includes a wi-max venture with Intel and a hosting service.
City sources say that the big players, such as Carphone and BSkyB, are unlikely to agree to take on these parts as well as the broadband customers.
The UK base of Tiscali, the Italian broadband group, is deemed to be the next likely sale candidate after Pipex.
However, the group, which recently merged with HomeChoice, the television-on-demand business, insists that it will continue as an independent player.
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