TeleCity/Redbus merger talks in trouble

A deal to create Europe's largest web hosting group is on the brink of collapse.

Redbus Interhouse, the internet company, was close to agreeing a merger with rival TeleCity, only to put talks on hold after discovering a reported £20m cash shortfall in TeleCity's figures.

TeleCity issued a statement to the Stock Exchange today [Monday], in which it noted press speculation concerning its "current financial position" but said that negotiations were still continuing.

However, the firm warned that should the merger with Redbus collapse, it would need to "raise additional finance, whether debt or equity, in the short term to fund its business".

Redbus has three co-location sites open in London, Milan and Paris, with a further four scheduled to open shortly in Europe.

TeleCity has 12, across Europe.