FRONT PAGE - COMPANIES & MARKETS: Tiscali board excludes Carphone from shortlist of would-be buyers

By Andrew Parker in London
Published: May 13, 2008

Carphone Warehouse, the UK's third largest broadband provider, suffered a setback yesterday when it was excluded from a shortlist of would-be buyers of Tiscali, the Milan-listed internet company.

Tiscali's board finalised the list during a four-hour meeting and decided to eliminate Carphone from the sale process, people familiar with the matter said.

They added that Tiscali was preparing to open up its books to six of the seven companies that last week made indicative offers for the company.

Carphone made an informal offer of about £550m for Tiscali's UK assets, and its removal from the second round of the sale process is a blow.

Charles Dunstone, Carphone's chief executive, has been keen to buy Tiscali's UK operations, which would make his group the UK's largest broadband provider, ahead of BT and Virgin Media.

Mario Rosso, Tiscali's chief executive, said after the board meeting: "Until now, the process has been going exactly as expected. In the definition of the shortlist, we have not considered those who did not realise the industrial value of the group."

People familiar with the situation said Carphone's only hope of trying to re-enter would be if it markedly improved its offer. Carphone declined to comment.

Last week Carphone said it would receive £1.1bn in cash from Best Buy, the US consumer electronics retailer that is setting up a European joint venture with Mr Dunstone's company.

Tiscali shares closed up 2.6 per cent at €2.5 last night, giving it a market capitalisation of €1.4bn. It has 1.8m broadband customers in the UK and 600,000 in Italy.

Tiscali's board hopes to conclude its sale process next month after a period of due diligence by the six groups on the shortlist.

They include Vodafone and British Sky Broadcasting.

Tiscali yesterday reported a net loss of €37.5m for the first quarter of 2008 compared with €42.5m in the same period last year. Revenue was up 43 per cent at €276.4m.

Best Buy plots, Page 22