British telecoms firm BT has agreed to buy PlusNet for £67m in cash to strengthen its position in the increasingly competitive market for broadband internet services.
The deal is the latest move to consolidate the broadband Internet market as operators seek economies of scale to cope with cut-price competition. Last month, retailer Carphone Warehouse agreed to buy Time Warner's AOL internet access business in the UK for £370m.
BT said last week its share of new broadband customers had slipped to 22% during the second quarter of its financial year from 25% in the previous quarter, sparking fears it was losing out to competitors, though its overall share of the broadband market remained fairly steady at 24%.
BT said it would pay 210p a share for PlusNet, a premium of 17% to its closing price on October 11, the day before the firm said it had received a takeover approach. PlusNet has close to 200,000 broadband customers and BT said that, under the deal, it would retain its brand. In the year ended June 30, PlusNet had revenues of £41m and net income of £3.9m.
