World Online
Encyclopedia
World Online was a European Internet Service Provider
(ISP) which came to prominence in the late 1990s dotcom boom.
Founded by Dutch entrepreneur Nina Brink, World Online's name indicated its aspiration to rival the hugely successful American ISP, AOL
(America On-Line). The company aimed to provide free internet access across Europe. It launched its full internet service in the Netherlands in 1996, and grew rapidly to have a presence in 15 European countries and South Africa; counting some 1.9 million customers by the year 2000.
Based in Rotterdam
, the Netherlands, the company’s principal shareholders included the Swiss-based Sandoz Family Foundation, Dutch mobile provider Telfort
, Reggeborgh Beheer (an investment company) and Intel.
in 2000 proved a disaster and left the reputations of the banks, the Amsterdam stock exchange and the company itself tarnished.
It was set to be officially listed on the Amsterdam Stock Exchange
on March 17, 2000. It was underwritten by ABN AMRO
and Goldman Sachs
, and promoted via a pan-European ad campaign involving hired celebrities like royal Sarah, Duchess of York
, actor Christopher Reeve
, and rocker Joe Cocker
.
The initial price of the stock was set at €43, giving the company a valuation of €12 billion — the largest ever IPO for the Amsterdam exchange, and the largest IPO of any European Internet company. The initial offer on the AEX was 21 times oversubscribed.
However, not everyone was confident the company’s success was secure. World Online’s 1999 revenues totalled a mere €64 million, while net losses reached €91 million. More telling, while WOL was a giant in the Netherlands, it was a minor player in most of its other markets. It was not even among the top five players in the crucial markets of France, Germany, or Italy. Moreover, the €12 billion valuation assessed the company’s 1.9 million subscribers at a high €6,500 each. France-based ISP LibertySurf, which did an IPO the day before WOL's, valued its subscribers at less than €3,000 each.
In pre-launch trading in London's gray market, World Online's shares were going for upwards of €72. When the AEX opened on Friday, March 17, trading in WOL stock was fast; some 57 million of the 64 million new WOL shares were traded on that first day. Although the price rose briefly to €50, the upsurge was not to last. Trading had to be suspended three times after price falls, and the stock finally ended the day back at €43.
On its second day of trading, WOL tumbled 16% below its listing price. By March 22 the stock was trading at €31. The stock continued to fall over the next days; its value plunging from €12 billion to €5 billion in a week.
The tumbling share price coincided with the disclosure that Nina Brink had sold her stake in the ISP in December, prior to the flotation, for $60 million. A San Francisco-based private equity house, BayStar Capital
, purchased her slice of the business at just $6.04 a share.
Dutch investors, including World Online staff who took up loans from the company to buy shares, were outraged. Many claimed that they would never have invested in the company in the first place if they had known Brink had already sold her shares. Though the prospectus noted that Brink had "transferred" her shares, aggrieved shareholders claimed that they were misled because the prospectus should have said she "sold" her shares to Baystar.
It later became known that, fearing a market collapse, the banks had wanted the WOL float to go ahead quickly. The AEX, however, had threatened to stop the initial offering because of Brink's pre-selling of most of her holding. ABN Amro responded by threatening an injunction against the exchange.
The AEX wanted Brink to lock up the shares transferred to Baystar, and $25 million being her participation in Baystar. She agreed to an extra lockup arrangement on shares she still controlled, and this was put in the prospectus. As a result of an apparent deficiency in Dutch law, it was not necessary for Brink's shareholding to be fully disclosed in the prospectus.
The exchange eventually permitted the listing after it was shown that Baystar had not agreed to a lock-up agreement to keep its shares for a time, as is usual in such situations. In fact, Baystar had been an aggressive seller from the first day of trading.
James Kinsella, an American, previously CEO of MSNBC.com
, replaced Brink as Chairman of World Online in June. He curtailed marketing and the editorial department, and fired 150 employees at the Rotterdam corporate headquarters. He focussed on becoming a network operator and increasing subscriber numbers by introducing a flat-fee service, but the company was limited in its success of stimulating growth.
, an Italian ISP, announced their intention to combine the two companies to create a pan-European Internet network company. The new company would provide new telco, media and e-commerce services to the largest pan-European customer base.
The combination maintained the Tiscali name and its headquarters in Sardinia
, Italy
. Renato Soru
, the founder of Tiscali, became Executive Chairman with James Kinsella becoming Chief Executive.
Tiscali emerged from the all-share deal with 56.7% of the new company while World Online had 43.3%. The merger was essentially a sale for $5.1 billion, creating, with over 6 million subscribers, the second-largest ISP in Europe, after Deutsche Telekom
's T-Online
.
The move gave Tiscali access to the cash raised by World Online at its IPO. The new company was set to have a market capitalisation of about $11.2 billion and be a market leader in Italy, the Netherlands, Belgium, Denmark and the Czech Republic.
In November 2000 the HQ of World Online was raided concerning allegations of insider trading. In February 2001, Kinsella resigned from his position after clashing with Soru. Kinsella went on to become Chairman of Interoute
, a large European network operator owned by the Sandoz Family Foundation. Brink is now a Dutch tax exile
living in Brasschaat
, Belgium. Renato Soru
was elected President of the Sardinia Region of Italy in 2004.
Internet service provider
An Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...
(ISP) which came to prominence in the late 1990s dotcom boom.
Founded by Dutch entrepreneur Nina Brink, World Online's name indicated its aspiration to rival the hugely successful American ISP, AOL
AOL
AOL Inc. is an American global Internet services and media company. AOL is headquartered at 770 Broadway in New York. Founded in 1983 as Control Video Corporation, it has franchised its services to companies in several nations around the world or set up international versions of its services...
(America On-Line). The company aimed to provide free internet access across Europe. It launched its full internet service in the Netherlands in 1996, and grew rapidly to have a presence in 15 European countries and South Africa; counting some 1.9 million customers by the year 2000.
Based in Rotterdam
Rotterdam
Rotterdam is the second-largest city in the Netherlands and one of the largest ports in the world. Starting as a dam on the Rotte river, Rotterdam has grown into a major international commercial centre...
, the Netherlands, the company’s principal shareholders included the Swiss-based Sandoz Family Foundation, Dutch mobile provider Telfort
Telfort
Telfort B.V. is a Dutch mobile telecommunication company, and a subsidiary of KPN.It operates GSM mobile telecommunications service in the Netherlands...
, Reggeborgh Beheer (an investment company) and Intel.
IPO
WOL's IPOInitial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
in 2000 proved a disaster and left the reputations of the banks, the Amsterdam stock exchange and the company itself tarnished.
It was set to be officially listed on the Amsterdam Stock Exchange
Amsterdam Stock Exchange
The Amsterdam Stock Exchange is the former name for the stock exchange based in Amsterdam. It merged on 22 September 2000 with the Brussels Stock Exchange and the Paris Stock Exchange to form Euronext, and is now known as Euronext Amsterdam.-History:...
on March 17, 2000. It was underwritten by ABN AMRO
ABN AMRO
ABN AMRO Bank N.V. is a Dutch state-owned bank with headquarters in Amsterdam. It was re-established, in its current form, in 2009 following the acquisition and break up of ABN AMRO Group by a banking consortium consisting of Royal Bank of Scotland Group, Santander and Fortis...
and Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
, and promoted via a pan-European ad campaign involving hired celebrities like royal Sarah, Duchess of York
Sarah, Duchess of York
Sarah, Duchess of York is a British charity patron, spokesperson, writer, film producer, television personality and former member of the British Royal Family. She is the former wife of Prince Andrew, Duke of York, whom she married from 1986 to 1996...
, actor Christopher Reeve
Christopher Reeve
Christopher D'Olier Reeve was an American actor, film director, producer, screenwriter, author and activist...
, and rocker Joe Cocker
Joe Cocker
John Robert "Joe" Cocker, OBE is an English rock and blues musician, composer and actor, who came to popularity in the 1960s, and is most known for his gritty voice, his idiosyncratic arm movements while performing, and his cover versions of popular songs, particularly those of The Beatles...
.
The initial price of the stock was set at €43, giving the company a valuation of €12 billion — the largest ever IPO for the Amsterdam exchange, and the largest IPO of any European Internet company. The initial offer on the AEX was 21 times oversubscribed.
However, not everyone was confident the company’s success was secure. World Online’s 1999 revenues totalled a mere €64 million, while net losses reached €91 million. More telling, while WOL was a giant in the Netherlands, it was a minor player in most of its other markets. It was not even among the top five players in the crucial markets of France, Germany, or Italy. Moreover, the €12 billion valuation assessed the company’s 1.9 million subscribers at a high €6,500 each. France-based ISP LibertySurf, which did an IPO the day before WOL's, valued its subscribers at less than €3,000 each.
In pre-launch trading in London's gray market, World Online's shares were going for upwards of €72. When the AEX opened on Friday, March 17, trading in WOL stock was fast; some 57 million of the 64 million new WOL shares were traded on that first day. Although the price rose briefly to €50, the upsurge was not to last. Trading had to be suspended three times after price falls, and the stock finally ended the day back at €43.
On its second day of trading, WOL tumbled 16% below its listing price. By March 22 the stock was trading at €31. The stock continued to fall over the next days; its value plunging from €12 billion to €5 billion in a week.
The tumbling share price coincided with the disclosure that Nina Brink had sold her stake in the ISP in December, prior to the flotation, for $60 million. A San Francisco-based private equity house, BayStar Capital
BayStar Capital
The LRG Capital Funds are managed by LRG Capital Group, LLC. Through its BayStar Capital III Investment Fund, a multi-strategy investment fund, the firm makes direct investments in small-to mid capitalization, public and late-stage private companies, primarily within the technology and life...
, purchased her slice of the business at just $6.04 a share.
Dutch investors, including World Online staff who took up loans from the company to buy shares, were outraged. Many claimed that they would never have invested in the company in the first place if they had known Brink had already sold her shares. Though the prospectus noted that Brink had "transferred" her shares, aggrieved shareholders claimed that they were misled because the prospectus should have said she "sold" her shares to Baystar.
It later became known that, fearing a market collapse, the banks had wanted the WOL float to go ahead quickly. The AEX, however, had threatened to stop the initial offering because of Brink's pre-selling of most of her holding. ABN Amro responded by threatening an injunction against the exchange.
The AEX wanted Brink to lock up the shares transferred to Baystar, and $25 million being her participation in Baystar. She agreed to an extra lockup arrangement on shares she still controlled, and this was put in the prospectus. As a result of an apparent deficiency in Dutch law, it was not necessary for Brink's shareholding to be fully disclosed in the prospectus.
The exchange eventually permitted the listing after it was shown that Baystar had not agreed to a lock-up agreement to keep its shares for a time, as is usual in such situations. In fact, Baystar had been an aggressive seller from the first day of trading.
Post IPO
Brink resigned from her job in April under pressure from employees and investors. In May, a class action was brought to a Dutch court alleging that World Online, its bankers, ABN Amro, and Brink broke Dutch securities regulations when the ISP floated on the Amsterdam stock market.James Kinsella, an American, previously CEO of MSNBC.com
Msnbc.com
msnbc.com is a news website owned and operated as a joint venture by NBCUniversal and Microsoft.In addition to original content from its news staff, msnbc.com is the news website for the NBC News family, with content from the cable television news channel MSNBC, NBC shows such as Today, NBC Nightly...
, replaced Brink as Chairman of World Online in June. He curtailed marketing and the editorial department, and fired 150 employees at the Rotterdam corporate headquarters. He focussed on becoming a network operator and increasing subscriber numbers by introducing a flat-fee service, but the company was limited in its success of stimulating growth.
Sale to Tiscali
On September 7, 2000, World Online and TiscaliTiscali
Tiscali may refer to:*Tiscali, an archaeological village of Nuragici people, in Sardinia, Italy, notable because it was completely inside a huge cavern*Tiscali SpA, a telecom company based in Italy*Tiscali TV , multiple uses...
, an Italian ISP, announced their intention to combine the two companies to create a pan-European Internet network company. The new company would provide new telco, media and e-commerce services to the largest pan-European customer base.
The combination maintained the Tiscali name and its headquarters in Sardinia
Sardinia
Sardinia is the second-largest island in the Mediterranean Sea . It is an autonomous region of Italy, and the nearest land masses are the French island of Corsica, the Italian Peninsula, Sicily, Tunisia and the Spanish Balearic Islands.The name Sardinia is from the pre-Roman noun *sard[],...
, Italy
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
. Renato Soru
Renato Soru
Renato Soru is an Italian entrepreneur, the founder of the internet service company Tiscali, based in Cagliari. He was born in Sanluri, Sardinia....
, the founder of Tiscali, became Executive Chairman with James Kinsella becoming Chief Executive.
Tiscali emerged from the all-share deal with 56.7% of the new company while World Online had 43.3%. The merger was essentially a sale for $5.1 billion, creating, with over 6 million subscribers, the second-largest ISP in Europe, after Deutsche Telekom
Deutsche Telekom
Deutsche Telekom AG is a telecommunications company headquartered in Bonn, Germany. It is the largest telecommunications company in Europe....
's T-Online
T-Online
T-Online, a former subsidiary and now business unit of Deutsche Telekom, is the biggest internet service provider in Germany. It evolved out of the proprietary German Bildschirmtext information service in 1995...
.
The move gave Tiscali access to the cash raised by World Online at its IPO. The new company was set to have a market capitalisation of about $11.2 billion and be a market leader in Italy, the Netherlands, Belgium, Denmark and the Czech Republic.
In November 2000 the HQ of World Online was raided concerning allegations of insider trading. In February 2001, Kinsella resigned from his position after clashing with Soru. Kinsella went on to become Chairman of Interoute
Interoute
Interoute Communications Ltd, is a privately held telecommunications company, which owns and operates a next generation . The network links to 21 Metropolitan Area Networks in 29 countries across 55,000 km of lit fibre and includes 8 Data Centres and 32 Colocation Centres.Interoute’s network...
, a large European network operator owned by the Sandoz Family Foundation. Brink is now a Dutch tax exile
Tax exile
A tax exile is one who chooses to leave a country with a high tax burden and instead to reside in a foreign nation or jurisdiction which takes a lower portion of earnings. Going into tax exile is a means of tax mitigation or avoidance.-Legal status:...
living in Brasschaat
Brasschaat
Brasschaat is a municipality located in Flanders, one of the three regions of Belgium, and in the Flemish province of Antwerp. The municipality only comprises the town of Brasschaat proper. In November 2006, Brasschaat won the LivCom-Award 2006 for the most liveable municipality in the world....
, Belgium. Renato Soru
Renato Soru
Renato Soru is an Italian entrepreneur, the founder of the internet service company Tiscali, based in Cagliari. He was born in Sanluri, Sardinia....
was elected President of the Sardinia Region of Italy in 2004.