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Freeserve prices IPO
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July 12, 1999: 6:22 a.m. ET
U.K.'s largest ISP to offer shares at bottom of expected range
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LONDON (CNNfn) - Electronics retailer Dixons took the safety-first option Monday by pricing the IPO of its free ISP unit Freeserve at the bottom of the anticipated range.
Freeserve stock will be sold to the public at a price of 130-150 pence per share, valuing the business at 1.3 to 1.5 billion pounds ($2.4 billion). The final price will be announced on July 26, when the shares will be listed in London and New York.
Dixons apparently hopes that offering the stock at the lower end of the range and limiting the number of shares on offer will ensure the shares rise to a hefty premium once trading begins.
Freeserve pioneered the free ISP concept and has rapidly become Britain's largest U.K. Internet access provider. Its success has encouraged a multitude of copycat offerings from soccer clubs to supermarket operators.
Freeserve has some 1.25 million subscribers, and they will be given priority allocation in the IPO. The listing prospectus is published Monday.
Some doubts have been raised over how to value Freeserve - 18.25 percent is being listed by Dixons - given its tiny revenues and itinerant subscriber base.
Senior Dixons executives have highlighted e-commerce as the essential next step for Freeserve.
Despite describing free ISPs as "an unworkable business model", the previous market leader in Britain, AOL Europe, has been forced to launch a comparable service of its own.
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AOL Europe
Freeserve
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