AOL starts round two of bidding for UK arm

The battle to buy AOL’s UK business has entered a crucial phase, with less serious bidders ruled out and more in-depth talks under way between the internet company and remaining suitors.

AOL’s UK operations are expected to attract bids of up to &£1bn. Its US parent company, Time Warner, has hired Citigroup to handle the bidding process.

Speculation on the likely frontrunners has focused on BSkyB, which last year bought Easynet for &£211m.

A source close to the bidding process says: “We’re at phase two, where more detailed discussions are taking place with those who are more serious.”

Some of the bidders are understood to be keen on joint-venture activity rather than an outright purchase of the operations. However, there are expected to be several months of talks before a deal is signed.

AOL has been developing its portal in recent months in an effort to attract more visits from non-subscribers and more online advertising.

The internet company first tested free content on the portal to tie in with last year’s Live8 concert.

In the past fortnight it has added further content such as games, money and shopping channels as it seeks to take on rivals including Yahoo! and MSN.

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