Disappearing act

23 April 2012 By Quentin Webb

The UK telco is justified in recommending a 1 bln pound bid from Vodafone, even if top shareholder Orbis is unimpressed. The only rival bidder quit, and the premium is 92 pct. But Vodafone’s coyness on the synergies naturally fuels the suspicion it could afford to pay more.

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On April 23 Vodafone, the world’s largest mobile operator by revenue, said it agreed to buy Cable & Wireless Worldwide, the UK-listed telecoms provider, for an equity value of 1.044 billion pounds. The 38 pence-a-share offer represents a 92 percent premium to C&WW’s pre-approach price.

Shareholders owning 18.6 percent of C&WW shares committed to back the offer through irrevocable undertakings or letters of intent. However Orbis, C&WW’s largest shareholder, said while it believed management had handled the auction “responsibly”, it was “concerned that the offer price does not appear to reflect the value inherent” in C&WW.

The offer follows 10 weeks of bid talks, beginning in early February when a newspaper revealed Vodafone was preparing a bid. Vodafone was later joined by rival suitor Tata Communications, but on April 18 the Indian company said it had not been able to agree a price with C&WW and so did not plan to make an offer.

C&WW stock leapt 12.2 percent to 35.9 pence a share, while shares in Vodafone dipped 0.06 percent to 171.4 pence a share, outperforming a 1.85 percent drop in the FTSE 100.

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