Energis Gives Up on Germany

Struggling telecom company Energis yesterday admitted defeat in its search for a buyer for its German web hosting business, Ision, as it pushed the company into insolvency.

Energis bought 75% of Ision, which employs 770 people, in December 2000 for just over £500m as part of its plans to expand in continental Europe. A slump in demand for internet services coupled with Energis's own financial woes forced it to put the German business up for sale this year.

Energis pulled the plug on the firm yesterday to conserve its own dwindling cash resources as it admitted that a sale was not going to materialise. Administrators will be appointed within the next few weeks.

Analysts had hoped that Ision would be sold for a nominal sum so that Energis could avoid the costs of closure, which could run into tens of millions of pounds.

Energis, trying to finalise a financial restructuring after a profits warning this year, said that talks over the sale of its core UK business were progressing.

A number of venture capital companies have expressed interest, but market sources last night said that initial expectations of a price tag close to £1bn were "well off the mark".

Energis shut its Swiss business just over a month ago, is hoping to sell its Dutch arm and is looking for an exit from its Polish joint venture with National Grid.