Print | Share | Reprint

Vodafone may ring up CWW bid

by Andrew Bulkeley | Published February 13, 2012 at 11:35 AM

Cellular phone giant Vodafone Group plc on Monday confirmed it was considering ringing up a bid for Cable & Wireless Worldwide plc, or CWW, amid reports that at least one financial investor may also be interested in the struggling U.K. broadband services provider.

The admission ignited CWW's shares, pushing them up 35.3%, or 6.97 pence, in afternoon London trade to 26.72 pence, valuing the company at £713.15 million ($1.13 billion).

Vodafone, of Newbury, England, said it was in the early stages of evaluating an offer and would likely pay cash should it submit a formal bid.

The announcement follows a Sunday Times report that Vodafone was readying a £700 million offer for Cable & Wireless Worldwide, which separated from its fixed-line parent in 2009. London private equity shop Apax Partners Worldwide LLP is also taking a look a the company, according to the Times.

"A merger would give Vodafone a significant global network for fixed services to complement or even integrate with its mobile operations worldwide, and give it a significant position in global enterprise services," wrote Ovum analyst David Molony in a note.

London-based CWW, which provides computer and telephone services to corporate customers, has been suffering as companies slash investment amid economic weakness. In the first half of the year that ended March 31, 2011, the company slipped to a loss of £590 million after £87 million in profit in the first half of the previous fiscal year. Sales for the half slid 4.5% to £1.1 billion.

The loss sparked the exit of CEO John Pluthero in December in what might have been a telegraph about the company's future. He was replaced by Gavin Darby, a former Vodafone executive.

Vodafone is likely looking for a way to boost the amount of data traffic that its global mobile networks can carry. As more consumers switch onto smartphones, Vodafone's data needs have expanded. By buying globally active rivals such as CWW, Vodafone could more quickly move the data traffic off of wireless networks and onto fixed-line networks, where the data interacts with the Internet.

"Vodafone regularly reviews opportunities in the sector and confirms that it is in the very early stages of evaluating the merits of a potential offer for CWW. There is no certainty that an offer will be made nor as to the terms on which any offer might be made," Vodafone said.

CWW acknowledged the approach in a brief release but an Apax spokesman refused to comment on the report.

Both CWW and Vodafone said U.K. securities rules now require a bid to be submitted by March 12.

Share:

Telecom, Media & Technology

Vodafone may ring up CWW bid

Free preview

Meet the journalists

Andrew Bulkeley

Correspondent: Berlin

Movers & Shakers

Video

JPMorgan's stark choice

Sectors