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Affinity buys Breathe.com
LONDON (CNN) -- Affinity Internet Holdings on Monday agreed to buy the UK's No. 4 Internet service provider Breathe.com in a cut-price all-share deal. The sale comes amid a glut of ISPs in the UK and tumbling prices for Web assets. Several ISPs are up for sale, including Virgin.net, owned by tycoon Richard Branson and cable company NTL (NTLI: Research, Estimates). Affinity said it agreed to buy Breathe from retail chain Great Universal Stores for £1.75 million ($2.4 million) in new Affinity shares. Great Universal (GUS), which owns the Argos retail chain, rescued Breathe from the brink of bankruptcy when it paid £1.4 million for the ISP in January with the intention of using it to boost its e-tailing business. Affinity, a UK e-business solutions provider, said the Breathe acquisition would give it a business with more than 650,000 registered users. Affinity said it was also acquiring assets with a total value of £450,000 and goodwill of £1.3 million. The assets include the hardware, software and trade names and other rights. Great Universal will retain the intellectual property rights for the next generation of technology Breathe was developing for multi-device access to the Internet, a statement said. Affinity (AIH) shares jumped almost 4 percent to 343 pence after the deal was announced. The sale of Breathe for under £2 million comes three months after an agreement for NTL to buy full control of the Virgin.net ISP, valued by Virgin at about £240 million, or $341 million, was torn up. Virgin and NTL are still trying to sell the ISP, which claims 600,000 subscribers, making it at No. 5 in the UK. There are a number of other second-tier ISPs already on the market in the UK, but there are few buyers. British Telecom (BT-A) and United Business Media took more than five months to find a buyer for LineOne. They were forced to settle for about one third of what they hoped for when the sale was agreed to Italian ISP Tiscali for Note: Search results will open in a new browser window
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100 million ($85 million) in April, a price which now does not look so bad.