Wanadoo and Freeserve

Paper Summary:

When French internet service provider Wanadoo offered to acquire Britain's Freeserve for 1.65 billion Euro ($2.4 billion) in stock in 2000, investors looked forward to the French company providing access to Europe's second-largest internet community. They hoped the move would push Wanadoo's share price into the realm of Yahoo's. This report therefore examines the effect of the takeover. From the perspective of the share price of both Freeserve and Wanadoo, it looks at whether any associated wealth for shareholders and investors grew since the take-over. The report explains the trends of the share prices of Dixon, who at the time was the majority share holder of Freeserve, in addition to any effect on France Telecom who held the majority of Wanadoo. The paper includes graphs.

From the Paper:

"When Wanadoo first made their offer, as expected, Freeserve shares rose sharply. Most experts saw Freeserve as an organization that was cash poor and they were not managing affairs well from an international perspective. Yet, the experts also seemed to believe that the acquisition would be a bad deal for the Freeserve investors. There was a silver lining of course, Wanadoo would provide a badly needed cash infusion and the combined company proved to be cash strong with well over 2 billion ($1.76 billion) which made the long-term investors see green. "It's a great fit, they don't have any overlap and Wanadoo's parent has great assets in Britain, and above all a strategy." (CNN Money, 2000)"

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