The big news story in the telecoms this week was that Vodafone agreed to buy the once mighty Cable & Wireless Worldwide for £1.04billion. The deal would move Vodafone from fourth to second in the UK telecoms market, overtaking O2 and Everything Everywhere, and beaten only by BT.
However, it is not all plain sailing, as within hours of the deal being announced on Monday, Cable & Wireless’s biggest shareholder, Orbis Investment Management, refused to back the bid. Orbis has over 19% of the shares in Cable & Wireless, and feels that the offer of 38p per share does not reflect the true value of the company. Orbis stands to lose a great deal of money if the deal goes through.
The only other bidder, Tata Communications, withdrew the previously week having only offered 25p per share. The deal has been supported by JP Morgan Asset Management, Investec Asset Management, Cyrte Investments, RBC Global Asset Management and Sky Investment Counsel, which between them make up almost 20% of the shares.
Cable & Wireless has one of the largest fibre optic networks in the UK, allowing Vodafone to carry more mobile internet traffic at a reduced cost. They provide telecoms networks to 70% of the FTSE 100 and the NHS.
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