Vodafone has said it is weighing up a bid for struggling Cable & Wireless Worldwide (CWW). The revelation of possible takeover interest sent shares in corporate telecoms firm CWW soaring 44 per cent. Under the takeover code, Vodafone, which is keen to expand its services for multinational companies, has until 12 March to make a firm offer or walk away.
It said: "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."
Investment bankers were rubbing their hands at fresh signs of life returning to the takeover market, after deals for Xstrata, software firm Misys and Robert Wiseman Dairies since the start of the year. The disclosure also means that Gavin Darby, CWW's new boss, could rip up the new strategy he was expected to outline alongside trading figures this Thursday.
The former Vodafone man only took over the reins in November after his predecessor, John Pluthero, admitted the game was up as the company plunged to a £590m half-year loss.
CWW shares rose 8.79p to 28.54p, but are still two-thirds lower than they were a year ago. The company has been ailing since its international arm was demerged two years ago. A string of profits warnings saw the dividend axed.
Tim Daniels, an analyst at Olivetree Securities, said a deal could make sense for Vodafone because it had no fixed-line network in Britain in contrast to many other markets where it had integrated fixed and wireless networks.
"Pressure on data networks from smartphones and tablets means that mobile companies can't cope with all the traffic and have to move some of the overspill on to fixed-line," he said.
However, others were wary over of any potential takeover. "While it is possible to argue that there is some logic to bidding for these assets, which could be margin accretive, we think that it is by no means certain, nor necessary, for the UK business to do so," wrote Robin Bienenstock, an analyst at Bernstein Research.
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