British firm Cable and Wireless Worldwide has agreed to a £1.04 billion takeover offer from Vodafone, just days after Tata Communications withdrew from talks after it failed to agree on a price.
Vodafone, which became the sole remaining contender for the troubled company, said it would be offering 38 pence a share, a 92 per cent premium to the C&WW share price on February 10, the day before the offer was first made.
C&WW, which provides voice, data hosting and IP-based services and applications, and 425,000 kilometres of international cable network, will help Vodafone diversify its business further beyond mobile handsets. In Britain, it will transform Vodafone into the nation's largest telecom operator after BT. C&WW also has international assets, including in India, where it serves around 150 corporate customers.
C&WW directors would be unanimously recommending the offer to shareholders, the two firms said in a joint statement.
Rejects criticism
Vodafone has rejected suggestions that tax synergy, including the use of C&WW capital losses in Luxembourg, was a key rationale for the bid.
During a conference call, the Vodafone CEO, Mr Vittorio Colao, repeatedly stressed the logic of the deal, and the synergies the acquisition of a fixed line network would present it, as well as the opportunities it presented the firm globally.
“It is an enterprise-focused acquisition and gives us good assets internationally and nationally and attractive network and cost saving opportunities,” said Mr Colao. He added that the C&WW brand had in the past been “underinvested” and has been in certain times managed for short term cash rather than the long term.
Cable and Wireless Worldwide's share price soared on Monday, up nearly 14 per cent in early afternoon trading. Its share price fell last week following the withdrawal of the Tata Communications talks. Shares of Vodafone ticked up around 0.7 per cent.