CAMPAIGN-I: Excite to merge with Chello in pounds 3.5bn deal

Excite is to merge all its non-US assets with Chello, the European broadband service provider owned by UPC, creating a euro5.5 billion (pounds 3.5 billion) company.

Excite is to merge all its non-US assets with Chello, the European

broadband service provider owned by UPC, creating a euro5.5 billion

(pounds 3.5 billion) company.



The news ends months of speculation about the future of Chello, which

earlier this year postponed an initial public offering on the Amsterdam

stock exchange, saying it was in talks with potential strategic

partners.



The company will be called Excite Chello and will be led by Roger Lynch,

the chief executive of Chello. A supervisory board will be co-led by

George Bell, the chairman of ExciteAtHome, and Mark Scheider, chairman

of UPC.



Excite Chello will position itself as an international broadband

internet group with access to high-speed internet links in Europe,

Japan, Latin America and Australia. The two companies claimed that

together they offer the largest cable footprint outside North

America.



Under the terms of the deal, ExciteAtHome and the European cable

operator United Pan-Europe Communications will be the major shareholders

in the company. Each will invest euro100 million in the venture.



The media group Liberty Media will also be a shareholder in the business

following its decision to make a euro200 million investment in the

company. It took a controlling stake in UPC’s parent company, United

Globalcom, earlier this month.



Excite Chello will have exclusive rights to deliver broadband internet

services to more than 30 million cable homes, and set-top box services

to more than 10.5 million homes with cable.



It is understood that Excite will need to get clearance from its joint

venture partners before closing the deal.