Talks between British Sky Broadcasting and Tiscali have come to a temporary halt because the companies cannot agree on the valuation of the latter's UK division.
When it became known this year that the Italian company wanted to sell assets, including its 1.84m-customer UK broadband service, the price range mentioned by people familiar with the company went as high as £600m, although analysts indicated that a range of £425m to £510m was more realistic.
In November, BSkyB went into exclusive talks with Tiscali as other interested parties, such as BT and Carphone Warehouse, dropped out.
Then, there was talk of a valuation of £450m, but with increasingly difficult trading conditions in all consumer-related businesses, that has fallen, according to a person with knowledge of the negotiations.
"The ball is in Tiscali's court, but essentially Sky is saying this isn't worth what Tiscali is asking, and Jeremy Darroch [BSkyB's chief executive] appears to be taking a pretty strong stand", the person said.
Both companies declined to comment.
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