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Vodafone wins support for CWW bid

by Andrew Bulkeley | Published June 18, 2012 at 12:27 PM

U.K. cellular behemoth Vodafone Group plc on Monday, June 18, rung up enough support to proceed with its £1.04 billion ($1.67 billion) acquisition of Cable & Wireless Worldwide plc after the target's biggest shareholder abandoned its opposition to the approach.

Hamilton, Bermuda, hedge fund Orbis Holdings Ltd. pledged its 19% CWW stake to the deal, giving Vodafone acceptances representing 78% of outstanding shares just as stockholders of the corporate broadband services provider voted on the approach Monday.

Vodafone is paying 38 pence per CWW share, an 8.4% premium to the stock's Friday close and 92% more than the shares' close Feb. 10, the day before CWW put itself up for sale.

The U.K. cellphone specialist needs acceptances representing 75% of the CWW's share capital for the deal to succeed.

Despite receiving the backing of CWW's board, Orbis and a handful of analysts said the deal undervalued CWW. Still, most acknowledged that no other suitor had surfaced.

London-based CWW began reviewing bids after its earnings dropped along with corporate spending on information technology. The troubles led to the December resignation of CEO John Pluthero. The auction initially drew bids from Vodafone and Mumbai's Tata Communications Ltd., but the suitors reportedly had trouble finalizing their offers -- CWW twice had to extend the deadline for approaches.

Tata dropped out in April, leaving only Newbury, England-based Vodafone as a bidder.

The deal will give Vodafone a fixed-line network in the U.K., the only major European market where it lacks one, as well as a significant base of corporate customers. It will also be able to more quickly move data traffic off its cellular networks and onto fixed-line networks around the world, improving service.

In the first half of the fiscal year that ended March 31, CWW slipped to a loss of £590 million, down from £87 million in profit in the first half of the previous fiscal year. Sales for the half slid 4.5% to £1.1 billion. CWW shares leapt 8%, or 2.78 pence, to 37.81 pence, in midday London trade, while Vodafone traded just 0.15 pence higher at 173.85 pence.

CWW was advised by Barclays plc's Mark Warham, Stuart Ord and Jack Callaway, as well as Rothschild's Nigel Higgins, Jeremy Boardman and Richard Murley. It received legal counsel from Herbert Smith LLP.

Vodafone received financial advice from Simon Warshaw, Christian Lesueur and Jonathan Rowley at UBS Investment Bank.

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Vodafone wins support for CWW bid

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