It also marks the end of the pair's partnership The charge provoked an unnnusually fierce reaction from Pearson. A handful of very senior executives at the company contacted The Sunday Telegraph following publication of the article two months ago to complain.Robert Peston, City editor of the newspaper, wrote a week later that he had been caught in the "crossfire" between the two, both of whom he had worked for.Some insiders at Collins Stewart believe the FT's coverage of the allegations of Mr Middleweek are part of its desire to have its revenge on the brokerage.. The two fell out badly when Mr Smith used a column he writes for The Sunday Telegraph to attack Pearson's accounting methods.Mr Smith, who built a reputation as one of the most respected analysts in the City when he wrote a book in the early Nineties highlighting similar problems with other companies, suggested Pearson had used misleading accounting methods. The battle between Mr Middleweek and the company began last week when the disgruntled former employee's potentially very damaging allegations about the company came to light.The row with the FT may, however, also have its roots in a disagreement between Collins Stewart and Pearson, the media and publishing giant which owns the FT. The letter contains details of taped conversations between FT journalists and their contacts which Schillings argues demonstrates evidence of "thoroughly irresponsible journalism".The firm, which has a reputation for being one of Britain's most aggressive practitioners of libel law, claims that an unnamed FT journalist telephoned Justin Seager a fund manager at Jupiter Asset Management, saying he wanted to write an "unkind" article about Collins Stewart."For the Financial Times to indulge in this muck raking does a disservice to every known concept of objective reporting," the letter says.The FT's articles, Schillings claims, helped to wipe millions off Collins Stewart's share price and also to damaged the "hard-won" reputation of the company, created by Terry Smith, its chief executive. Collins Stewart's lawyers, Schillings, yesterday unleashed a fierce attack on the Financial Times, accusing its journalists of using James Middleweek's allegations to mount a "sustained campaign" against the company. Schillings sent a vitriolic letter to the FT, saying its client intended to sue the newspaper. It said yesterday it had signed up the Lloyds pharmacy chain of 1,300 shops although it also sells through Orange, Littlewoods and Texaco.Eric Abensur, Freeserve's chief executive, said: "We have been prepared for the possibility of a non-renewal of the Dixons contract for some time.". It went on to sell the business to France Telecom's Wanadoo internet arm in all share deal in early 2001, although it has been selling the stock ever since. Dixons, which still owns about 85.9 million Wanadoo shares, estimates it has made around £1bn out of Freeserve since launching it.AOL will replace Freeserve's narrowband internet product in the Dixons-owned shops from February of next year but will not replace Freeserve's broadband offering in the chain until February of 2005.The deal leaves Freeserve looking for a new high street electronics partner. It also marks the end of the pair's partnership.Dixons set up Freeserve in 1998 and floated it on the stockmarket a year later. The internet service provider AOL is expected to have to pay up to £100m to the electronics retailer Dixons over the next five years for a deal to have its internet products sold in the company's Dixons, Currys, PC World and The Link stores.
Orange's board, which received a "fairness opinion" from its financial advisors, has unanimously recommended the deal.. The French government will own a stake of around 53 per cent to 54 per cent in the company following the move - down from about 59 per cent currently.While the move had been widely expected, it came sooner than most had thought. Should the minority investors in Orange club together, the analysts said, they could prevent the deal going ahead in the hope of getting a better offer.A spokesman said France Telecom had also drawn the conclusion there was no longer any point in Orange being listed on the stockmarket since valuations of fixed and mobile operations are so similar France Telecom's offer runs from 12 September to 7 October. He also said the company could resume dividend payments next year.There is also a tax benefit to France Telecom for doing the deal in that the taxable profits of Orange's French operation can be offset against France Telecom's €12bn of tax losses.Analysts at Cazenove said France Telecom was effectively paying a premium of about €1bn to take advantage of about €6.5bn of tax savings. The debt-laden French company is keen to get 100 per cent control of Orange, regarded as the group's cash cow, to help it cut borrowings further.Mr Breton, who was brought in to mastermind France Telecom's turnaround, has overseen a reduction in debt to current levels of €49bn from around €70bn. T-Mobile is owned by Deutsche Telekom and 3 is controlled by Hutchison Whampoa.Thierry Breton, France Telecom's chairman and chief executive, said the move would help strengthen the company's financial structure and give it extra "financial flexibility".He said he expected Orange to be "an additional trump card" in the transformation of France Telecom. Retail investors were allocated shares at €9.5 while institutions were allocated stock at €10.If, as expected, France Telecom succeeds in its bid, it will leave only two of the UK's five mobile phone operators - Vodafone and mmO2 - listed on the London stockmarket. |
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