STOCKHOLM (04/06/2000) - Berlin-based Internet services company Pixelpark AG announced today in a tersely formulated statement that its pending merger with Sweden-based Cell Network AB and Mandator AB has been called off.
In what it said was a surprise and an unacceptable move, Cell Network/Mandator aimed to bring about new negotiations about the terms of the merger this week by suddenly cancelling their agreed-upon participation in an in-progress road show for international investors, Pixelpark said in the statement.
"We have a clear contract that Cell Network/Mandator alone have not fulfilled.
We reserve the right to take all appropriate legal action," Paulus Neef, chief executive officer of Pixelpark, said in the statement.
Cell Network/Mandator, meanwhile, in a joint statement issued today said that Pixelpark had unilaterally decided to call off the transaction, and that the request by the Swedish companies to discuss the structure of the deal was in full compliance with the merger agreement.
The pending merger between Cell Network and Mandator will go forward as planned, the companies said. [See "Merger Creates Europe's Largest Net Consultant," Feb. 8.]At the time it was announced two weeks ago, the all-stock merger transaction between Pixelpark and Cell Network/Mandator was valued at 2.4 billion euros (US$2.3 billion). By joining forces, the companies aimed to create a major European Internet consultancy with some 2,300 staff and a network of offices stretching from Kuala Lumpur to Berlin and Stockholm to New York. [See "German, Swedish Net Companies Join Forces," March 22.]Following the recent downturn in IT stock valuations, however, the terms of the all-stock merger deal may have become less attractive to Cell Network/Mandator shareholders, said Marianne Kolding, London-based practice manager in market researcher International Data Corp.'s (IDC's) European services group, in a telephone interview today.
"We recently actually predicted that common sense would return to the market and that this could pose problems for many of the new Internet companies," said Kolding, referring to predictions IDC analysts made about the European IT services market at a conference held in Barcelona last week. [See "EURO IT FORUM - Changing IT Services Landscape Poses Challenges," March 27.]By the end of yesterday's trading, the merger transaction was valued at 1.4 billion euros following a recent drop in the value of Pixelpark stock, Kolding noted.
IDC is owned by International Data Group Inc., the parent company of IDG News Service.
Pixelpark, in Berlin, can be reached at +49-30-34981-500, or via the Web at http://www.pixelpark.com/. Cell Network, in Stockholm, is at +46-8-5220-4000, or via the Web at http://www.cellnetwork.com/. Mandator, also in Stockholm, is at +46-8-402-3100, or at http://www.mandator.com/.