Talks between Conduit, the troubled directory inquiry business, and German company Telegate about a possible takeover bid have collapsed.
The two companies confirmed yesterday that they were no longer in negotiations, just weeks after it was reported that Telegate had agreed to pay €10-€15 million for the Irish company's UK operations.
Conduit, which operates the 11850 service in the Republic and 118888 in Britain, said it was now at an advanced stage of negotiations with a prominent investor group to secure the re-financing of its entire business.
It is understood the firm, which shed 350 jobs at its call centres in the UK last year, felt the Telegate bid undervalued its British operation, on which it has spent up to €30 million.
The company claims to have secured 18 per cent of the UK directory inquiries market, valued at up to €300 million a year. But it continues to face a stiff challenge from more than a dozen competitors, including BT and The Number, whose strong advertising campaign has helped it to secure as much as 50 per cent of the market.
A Mori survey last year indicated that, despite its multimillion pound marketing campaign, Conduit had failed to achieve widespread brand recognition in Britain.
But, in a statement yesterday, Conduit said that, after the recent restructuring of its business in the UK, its financial position had "substantially improved".
While it said Telegate had sought to acquire its UK and Spanish businesses, the new proposed investor would refinance its entire operations.
Predicting the successful conclusion of talks "in the near future", the statement added that "the board of Conduit appreciates the support which it has received from its customers, banks, creditors and employees over the past few months".
Telegate, which already runs a directory inquiry service in the UK, confirmed yesterday that it had withdrawn an offer for Conduit's rival operations. A spokesman said it was concentrating on developing its own services.
Uncertainty over the future of Conduit was heightened by the departure of chief executive Mr Liam Young last September "for personal reasons".
Mr Young remains a shareholder in the company, which he founded with chairman Mr Eddie Kerr in 1996 to take advantage of the deregulation in directory inquiries markets in Europe. After gaining a foothold in the Irish market, it expanded into several European countries including Switzerland, Spain and Austria.
The expansion was financed through a public flotation on the German Neuer Markt exchange in June 2000, which valued the firm at €280 million. Less than three years later, Mr Kerr, Mr Young and other directors of the firm took Conduit private in a deal valuing it at €55.4 million.
Formula One entrepreneur Mr Eddie Jordan is among other shareholders.
