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The deal, based on a cash offer of 210p per share, will add 200,000 broadband subscribers to BT's own broadband customer base. The offer has been unanimously recommended by the PlusNet directors.

PlusNet revealed it was being wooed by a potential buyer more than a month ago, prompting its stock to surge some 30 per cent towards the 200p range. It currently sits near BT's offer at 208.25p.

PlusNet's most recent fiscal year saw it turn a net profit of £3.9m on revenues of £41m. BT says PlusNet will retain its name identity, continue to operate out of Sheffield, and praised the company for its 'strong reputation for both customer service and innovation'.

Recent surveys of customer service levels from

BT Retail chief executive, Ian Livingston said: 'This offer makes great sense for BT. We already provide the UK's most popular and best-performing ADSL broadband service and this acquisition will ensure that even more people can enjoy our market-leading services. PlusNet's customers and employees will benefit from the combination of PlusNet's excellent platform and access to BT's resources and technology development.'

BT currently has around a third of the UK's broadband market. PlusNet has a tenth of that, around 3 per cent, with around a quarter of a million lines, according to ISPreview's for the first quarter of 2006.

Lee Strafford, the CEO of PlusNet who will remain in that position after the buyout, said: 'I am pleased to announce BT's offer this morning. While the PlusNet Directors continue to believe that PlusNet is a high quality business, our sector is consolidating and there are considerable benefits to PlusNet in becoming part of BT. BT recognises the importance of retaining PlusNet's identity and culture and I believe this will give rise to exciting opportunities for PlusNet, our customers and our employees.'