Vodafone's bid for CWW in doubt

VodafoneVodafone's £1 billion play for ailing telecoms group Cable & Wireless Worldwide has been cast into doubt after the target's biggest shareholder refused to back the deal.

The FTSE 100 company will become the UK's second biggest telecoms operator, behind BT, if its 38p a share offer is approved by 75% of CWW's shareholders.
But international fund manager Orbis, the largest single CWW shareholder with a 19% stake, said the offer undervalued the firm, despite it being a 92% premium to the closing price on the day before the talks were unveiled.

A spokesperson for Orbis said: "Although we believe the CWW management team has handled the bid process responsibly, we have declined to give an irrevocable undertaking or letter of intent to support the transaction."

CWW, which saw its shares rise 14% to 36.5p after the offer was unveiled, provides high-speed telecoms services to companies including Tesco and will help Vodafone boost its corporate arm at a time of slow consumer growth. CWW chairman John Barton said the deal was an "exciting opportunity" for CWW's stakeholders.

He said it would "enable shareholders to crystallise a value, in cash, that represents a significant premium to recent trading levels and avoid exposure to the risks inevitably presented by executing a medium-term improvement strategy".

The agreement comes after Indian rival Tata Communications walked away from discussions last week, leaving FTSE 100-listed Vodafone as the sole runner.

Vodafone said a reduction in headcount and office locations in places where the two firms overlap was likely but specific numbers are yet to be determined.

Andy Kerr, Communication Workers Union deputy general secretary, said: "We hope that Vodafone don't intend to asset-strip further at the expense of our members - their staff. However, in our experience, whenever there's a takeover there are job losses and staff in CWW in particular will be feeling concerned right now."

Vodafone said CWW's UK fibre network - which runs some 12,738 miles - fits well with the location of Vodafone Group's UK base stations and will provide fast data traffic at a lower cost to the wider market as demand for mobile data continues to grow. Vodafone is understood to be planning to hive off CWW's 260,000 miles of undersea cables, with potential buyers including American groups AT&T and Verizon. This reportedly has the potential to fetch about £500 million.

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