OFT is to probe into Tiscali-Pipex deal
Tiscali’s take over of Pipex seems to be delayed after the announcement of the Office of Fair Trading (OFT) that the £210 million deal would go under a probe to find out whether there are any important competition issues between the companies. It is also likely that OFT will impose conditions on the merger of two major UK ISPs, if the probe raises any suspicions over the deal. Consequently, OFT may ask Competition Commission for further probe into the matter.
This news comes in the wake of some major acquisitions that have been taking place in the recent years. Tiscali, an Italian based UK broadband provider and HomeChoice, a major television service provider merged last year. Two years ago, UK’s major satellite based broadaband provider BskyB acquired EasyNet for £211 with an aim to increase its broadband customer base in UK. Another rival ISP Virgin media is likely to be acquired in near future by private equity companies like Carlyle. In the fierce competitive environment, many ISPs especially medium sized firms, struggle to maintain their market share resulting in tie-ups between companies.
Pipex, the sixth largest UK ISP in terms of broadband customer has been passing hard times as its packages which come with special offers demand much more investment in terms of marketing and advertising. Moreover, Pipex is more keen on its business broadband services which it thinks have high potential growth.
On the other hand Tiscali, the fourth major ISP in UK has planned to expand the reach of its products after this acquisition.
