German, Swedish Net Companies Join Forces

STOCKHOLM (03/22/2000) - In this week's third, and largest, German-Swedish Internet tie-up, Berlin-based Internet services provider Pixelpark AG today unveiled an agreement to acquire two Stockholm-based Net and IT consultancies in an all-stock transaction valued at 2.4 billion euros (US$2.3 billion).

The news follows yesterday's announcement that Information Highway AB and Connecta AB, two other Sweden-based consultancies, had reached an agreement to buy Germany-based Berens/Partner AG in an all-stock transaction valued at 225 million euros. Berens/Partner, an Internet consultancy with offices in Düsseldorf, Hannover and Stuttgart has some 130 employees, according to a company statement.

In a deal unveiled two days ago, meanwhile, German media powerhouse Bertelsmann AG's online division agreed to purchase a 50 percent stake in Lund, Sweden-based Bokus AB, the largest online book seller in the Nordic region. The value of the transaction was not disclosed.

The merger frenzy is the result of a widespread notion among Europe's new upstart Net companies that they on their own are too small to take on international heavyweights, which often are U.S.-based.

Pixelpark's two merger targets, Cell Network AB and Mandator AB, for example, recently announced a pending merger deal to create a consulting company with a total of around 1,800 staff, while Information Highway and Connecta last month also agreed to merge. [See "Merger Creates Europe's Largest Net Consultant," Feb. 8.]However, while new constellations such as Cell/Mandator and Connecta/Information Highway may be big enough to take on any competitor in their home market, they still suffer from limited resources internationally.

Increasingly, the biggest problem facing European Net consultancies, which specialize in helping businesses move online, is that to be able to win contracts with multinational players, they desperately need to expand their international reach.

In the race to win the largest contracts, European consultancies often also end up facing strong competition from even bigger U.S.-based players with networks of branch offices throughout the continent, such as Razorfish Inc. or USWeb/CKS Inc., which became an even more formidable competitor after its merger with Whittman-Hart Inc. [See "USWeb/CKS, Whittman-Hart Complete Merger," March 3.]By merging, Pixelpark-Cell/Mandator will have around 2,300 staff members and a branch office network stretching from Berlin to Kuala Lumpur and Stockholm to New York, which should help the combined company to serve larger international accounts, according to a statement. Among Pixelpark's major international clients are Adidas-Salomon AG, Lufthansa AG, Bertelsmann AG and Zeiss AG, according to information from the company's Web site.

Similarly, the Bertelsmann-Bokus deal strengthens the German media giant in its battle with U.S-based Amazon.com Inc., the world's largest online book seller.

Bokus operates Web sites specializing in selling books in the four major Nordic markets of Denmark, Finland, Norway and Sweden. Bokus was formerly wholly-owned by KF Media AB, a unit of Sweden's largest consumer cooperative.

The Bokus sites, according to a statement, will now be renamed and become part of Bertelsmann's BOL.com network of sites selling books as well as music.

Pixelpark, in Berlin, can be reached via the Web at http://www.pixelpark.com/.

Cell Network, in Stockholm, is at http://www.cellnetwork.com/. Information Highway, in Sundbyberg, Sweden, is at http://www.ih.com/. Bertelsmann, in Gütersloh, Germany, is at http://www.bertelsmann.de. Bokus, in Lund, Sweden, is at http://www.bokus.com/.

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