Vodafone In £1bn Cable & Wireless Deal
Vodafone has confirmed a deal to buy telecoms firm Cable & Wireless Worldwide for more than £1bn.
The agreement comes days after a takeover deadline for Cable & Wireless Worldwide (CWW) was extended, after India's Tata Communications pulled out of negotiations.
"Vodafone... and Cable & Wireless Worldwide plc are pleased to announce that they have reached agreement on the terms of a recommended cash offer pursuant to which Vodafone will acquire the entire issued and to be issued ordinary share capital of CWW," Vodafone said a statement.
The offer values the entire issued ordinary share capital of CWW at £1.044bn, with shareholders recommended to accept the 38p price. In early Monday trading shares traded 16% up on the news.
Vodafone said the offer for CWW gave a 92% premium to the 19.8p closing price on February 10, which was the last business day before the offer closed.
The mobile phone giant has reportedly decided to carve up CWW, which now owns the largest fibre network in Britain and supplies telecoms to a majority of FTSE 100 companies.
Current CWW clients include Tesco, National Grid, AT&T, Aviva, Morrisons, Centrica and the NHS.
It is believed the acquisition of its fibre system will be used to expand the corporate client base as Britain's consumer mobile network reaches handset saturation.
Vodafone chief executive Vittorio Colao said: "The acquisition of Cable & Wireless Worldwide creates a leading integrated player in the enterprise segment of the UK communications market and brings attractive cost savings to our UK and international operations."
A number of profit warnings have been issued by CWW since it split from Cable & Wireless just over two years ago.
The company has its roots in the 1850s after Sir John Pender joined the board of the English and Irish Magnetic Telegraph Company.
It was involved from the start in the laying of underwater submarine cables around the world, which linked the outposts of empire and provided revolutionary speed of communications.
It now owns more than 250,000 miles of submarine cables linking 150 countries but Vodafone is expected to sell off the undersea cables business.
Meanwhile, Bermuda-based shareholder Orbis - a 19% owner of CWW shares - said it rejected the board-approved deal.
"With the transaction being accretive in the first year, the proposed deal is clearly attractive for Vodafone shareholders," an Orbis spokesman said.
"However, we are concerned that the offer price does not appear to reflect the value inherent in CWW."
Britain's Communication Workers Union (CWU) also voiced concerns over assets and job cuts.
"This appears to be a no-brainer for Vodafone who look set to make significant tax savings on CWW losses which could cover the purchase price," CWU deputy general secretary Andy Kerr said.
"We would have thought more tax evasion stories would be the last thing Vodafone would want.
"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."