Exclusive: Claranet buys Netscalibur

Consolidation in the ISP market gathers pace with "biggest deal in a year"...

UK business ISP Claranet is to buy rival UK business Netscalibur for an undisclosed sum, in a deal it is calling the largest of its kind in the past year. The combined group will have a turnover in excess of £70m and a customer base of more than 40,000 businesses across Europe. Claranet had already bought Netscalibur's German business last year and has now added the UK assets which it had courted for some time. Claranet is the largest non-telco business ISP in the UK and Netscalibur provides internet services, such as connectivity, security and hosting to customers including Lycos and Harvey Nichols. Steve Rawlinson, who will head up the combined company as managing director, told silicon.com: "We have had our eyes on this particular deal for some time and we went for Netscalibur now because it had become available from its previous owner. Since 1998 we have been in the market for acquisition but we had a very clear idea of what we were after and are very selective about the kind of companies we target." In terms of how the companies will co-exist, Rawlinson confirmed both will continue much as they are now in terms of public perception, though he admitted there is some work to do behind the scenes. "It is a bit early to say exactly how the two companies will be integrated, but there will be a lot we can do on the network side. We use the same hosting services and mail services and these can obviously be integrated very easily. But there is still a lot of network jiggery-pokery to do." He confirmed there will be some lay-offs from the Netscalibur side of the business. The UK ISP sector is ripe for consolidation and Rawlinson admitted that this deal may prove a catalyst for further moves by Claranet. However it is likely Netscalibur will be the company's first and last UK acquisition - certainly for the foreseeable future. He said: "There are definitely other acquisition targets which we have our eyes on, but no others in the UK." For the past two years Claranet has been awarded Best ISP at the Internet Services Provider Association awards.