Zigzag to run business for Internet Group
Internet Group, a Warsaw-based internet service provider (ISP), has announced restructuring plans for its five internet-related companies and its shoe-manufacturing operations, formerly known as Ariel. The firm also said it is seeking an investment partner.
As part of its restructuring plan, Internet Group plans to consolidate the five internet-service companies under the ISP Zigzag and create a second yet-to-be-named company that will specialize in web-page creation and electronic-commerce. As for the fate of shoemaking, Internet Group said it would stop its unprofitable shoe manufacturing activities by the end of 2000 and form a separate company to produce only shoe soles. The sole-manufacturer will then be sold.
Ariel, a Radom-based manufacturer of leather shoes for children and teenagers, bought Zigzag in March for $800,000 in a move designed to give the ISP quick access to its listing on the Warsaw Stock Exchange (WSE). Zigzag's former president and owner was one of the main shareholders of Ariel, where his brother was president and partial owner. The frenzy of internet fever that hit the Warsaw exchange during the first few months of the year prompted many non-tech companies, such as Ariel, to quickly announce their own internet plans. Once the two companies merged, Zigzag bought the rest of its current portfolio of internet-related companies in April and June. Internet Group then acquired Zigzag for zl. 8 million ($1.9 million) in July. Internet Group is currently listed on the parallel market.
Internet Group also said that it wants to find a strategic partner, either a foreign ISP, a media company or a telecom. The company said that it might also hold shares in a separate group of portals, vortals, application service providers (ASP) and companies that specialize in selling goods over the internet, said Marcin Marszalek, the president of Internet Group.
Despite the company's goals to acquire a partner and have a simple structure based on internet-related services, Internet Group has ambitious plans to offer an array of internet-access services, web-page design, electronic-commerce and computer-related applications.
Although the marriage between the ISP and the shoemaker took some industry observers by surprise in March, they were unfazed by the announcement of their divorce.
The president of one Warsaw-based ISP, who declined to be identified, said the company's intention to dump its shoe factory and break down its IT business into two areas was a sound move. He said it would likely boost revenue by providing a more diverse range of services, such as voice-over internet protocol (VoIP), or calling service via the internet. As for the timing of the announcement, however, he suggested that it was an attempt to boost Zigzag's falling share price, which dropped from zl. 18 a couple of months ago to zl. 6 two weeks ago. He added that after the restructuring, it would be easier for the company to grow in a joint venture by landing a strategic investor rather than going it alone on the Polish ISP market.
Magdalena Wierzchowska contributed to this article.
