Vodafone's £1bn swoop for CWW makes it No 2

Telecoms firm Cable & Wireless Worldwide's (CWW) leading shareholder, Orbis, is refusing to back its £1bn sale to mobile giant Vodafone.

Vodafone chief executive Vittorio Colao had hailed the long-anticipated CWW takeover, which he announced yesterday, saying it would mean his company would become the second-biggest telecoms firm in Britain.

"We will move from No 4 position to No 2," Mr Colao declared, pointing out how it will leapfrog Everything Everywhere and Telefonica's O2 to be second only to BT in terms of UK sales.

The combined Vodafone-CWW business will have British revenues of almost £7bn a year.

The CWW board has unanimously backed the 38p-a-share cash offer, but Orbis, which holds 19 per cent of Cable & Wireless, was not so confident, claiming: "The offer price does not appear to reflect the value inherent in CWW."

Mr Colao now faces a battle to persuade CWW shareholders. Around 18.6 per cent have so far backed the takeover and Vodafone needs the support of three-quarters of investors.

CWW shares jumped 12.19 per cent to 35.9p yesterday on news of the deal but that is still below the offer price, reflecting uncertainty in some quarters in the City.

The shares had plunged as much as 20 per cent last week after India's Tata Communications pulled its rival bid. Tata could yet make a fresh offer for CWW.

Vodafone is paying a 92 per cent premium to CWW's share price before the talks.

However, CWW's value has still slumped more than 60 per cent since 2010 following its troubled split from mobile operation Cable & Wireless Communications.

Mr Colao said CWW, which has a big fixed-line fibre network, will complement Vodafone's own mobile network.