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Belgacom 'eyes' French ISP
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January 3, 2001: 8:32 a.m. ET
Report: Liberty Surf near partnership with Belgian telecom company
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LONDON (CNNfn) - Liberty Surf shares soared 21 percent Wednesday after a report said the French Internet service provider is in advanced talks with a possible Belgian partner.
After trading in the stock was halted limit-up on the Paris stock exchange, Liberty Surf rallied 12.7 percent to  6.40, rising as high as 6.86 after French daily Le Figaro reported the ISP is in talks with Belgian national telecom operator Belgacom about combining their web activities.
Liberty Surf said in a statement: "Following media reports referring to talks with a telecoms group, Liberty Surf would indicate that while talks are going on with different partners, they could either reach or not reach a conclusion."
Belgacom declined to comment.
France's second-largest ISP said recently a partnership with either a telecom operator or media company would make sense. The newspaper report said a deal might be announced as early as this week.
Analysts speculated that Belgacom, which is unlisted, might seek to strike the deal through Infosources, its 68-percent owned Internet subsidiary. Shares of Infosources slipped 18 percent in Brussels following the report.
Belgacom might be required to pay partly in cash for Liberty Surf, which closed Tuesday with a market value of roughly 520 million ($494 million). Liberty Surf also has cash reserves of more than 300 million. The market value of Infosources was about 291 million. 
"From an industrial point of view, such a deal would make sense, but it does beg questions about the financing," said David Cerdan, a sector specialist at HSBC-CCF.
Matthieu Xerri, an analyst at Meeschaert-Rousselle, said a deal would be logical as Belgacom had expressed a desire to boost its French presence when it bought Infosources in December.
Belgium said last month it was in talks with "several potential European partners" about a strategic tie for Belgacom, which is 50.1 percent state-owned. The rest is held by a consortium led by U.S. telecommunications company SBC Communications Inc. (SBC: Research, Estimates).
Infosources is 68.48 percent owned by Belgacom, which took control of the group and 67.98 percent of its voting rights after a public offer in December.
While most analysts expect Liberty Surf to be bought sooner or later because it lacks the size to compete with its European rivals, they expect its two main shareholders -- France's Groupe Arnault and British retailer Kingfisher PLC (KGF) – to seek a keen price.
Infosources had more than 610,000 active users at the end of October with 200,000 in France. Liberty Surf estimates it has 730,000 users, 600,000 of those in France.
-- from staff and wire reports 
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