Internet domain giants join race for £1.3bn rival Host Europe

Two of Europe's biggest providers of web hosting services are teaming up with private equity groups in a bid to win control of a British-based rival valued at more than £1bn.

Sky News understands that Strato, which is owned by the German Deutsche Telekom, is working on a joint bid for Host Europe with the buyout firm Hellman & Friedman.

United Internet (LSE: 0GE4.L - news) , a German internet services manager, has teamed up with Warburg Pincus to submit an offer ahead of a deadline next month, banking sources said.

The two joint bids ‎could face competition from GoDaddy (Frankfurt: 38D.F - news) , another prominent provider of web-hosting services.

Host Europe, which is owned by Cinven, another private equity firm, is expected to be valued at well over £1bn and possibly as much as £1.3bn, according to earlier reports.

The auction of the company comes as an explosion in demand from consumers and small business owners for managed web services drives up the value of firms offering those services.

A sale process was planned before the UK's referendum on membership of the European Union, but was delayed by volatile markets in the aftermath of the vote to leave.

None of those involved in the process, which is being run by UBS (LSE: 0QNR.L - news) , would comment on Thursday.