Orbis forced to throw in the towel over CWW

Orbis, the investment group, bowed to the inevitable yesterday and called off its threat to conduct a guerilla war against Vodafone's bid for Cable & Wireless Worldwide.

Having built up a near 20 per cent stake in the group – which made it the biggest shareholder – the investor could have proved a considerable irritant to Vodafone.

It certainly huffed and puffed a bit, even threatening to hang on as a minority shareholder in an unlisted CWW after the completion of the deal. Which was just a little bit silly because Vodafone is structuring the transaction as a scheme of arrangement which doesn't allow refuseniks to stick around.

It does require the backing of 75 per cent of shareholders to succeed, so Orbis wouldn't have needed much support to cause a problem.

And its central point – that the £1.04bn bid undervalues CWW – has a lot of merit. CWW as an independent entity might have been one step out of the knackers' yard but its assets could prove extraordinarily valuable to Voders.

They immediately turn it into the biggest fixed-line telecoms provider after BT and mean that the company will at some point be able to package these fixed-line services alongside its mobile phone services to corporate clients, who might like such an arrangement.

What's more, that fixed-line capacity is becoming a hot commodity. Mobile companies already use fixed lines to transfer calls from the caller's mast to the recipient's.

They're going to need an awful lot more fixed-line capacity to transfer the sort of data people are increasingly using their phones to download.

Because it is cheaper to have your own cables than it is to lease other people's, Vodafone could easily make back the purchase price – which represents just eight weeks' free cashflow – within a matter of weeks. The more one looks at this transaction, the more it looks as if Vodafone has come away with a huge bargain even without CWW's tax write-offs, which the company insists it won't be able to use.

That's what tweaked Orbis's interest, and it merrily vacuumed up as many of the shares as it could get its hands on at prices rather bigger than the 38p a share that it's now going to get.

Trouble is, its fellow shareholders were delighted to get out at any price. Such is CWW's disastrous history that the prospect of the deal not going ahead induced a collective migraine in the lot of them.

The Bermudan fund manger appears not to have seen this coming. Its people were, perhaps, too busy poring over spreadsheets in their air-conditioned offices to pick up on the sentiment.

CWW may have been one step out of the knackers' yard but its assets could prove valuable to Voders