A lost opportunity to join the first division
Friday 03 May 1996
Some mergers, it appears, are just too ambitious and difficult to do, whatever the supposed industrial logic. All businessmen dream of subsuming their competitors to create the dream team, powerful and ready enough to take on the world. But when the practicalities are examined closely enough, it often proves impossible.
In this particular case it was a combination of pricing, regulatory and international partnership issues that finally sank the deal. Rod Olsen, C&W's acting chief executive, describes it as "a fruit cocktail" of problems, many of them so intractable that it made no sense to carry on. While the BT negotiations continued, Cable & Wireless became frozen in time, unable to pursue business opportunities with anyone else.
BT puts a rather different spin on events. For BT it was not so much the regulatory issues that sank the deal as the difficulty of persuading C&W to agree a realistic price. Nonesense, says C&W. We never got round to discussing price. As always, the truth probably lies somewhere between. Plainly there was a price at which the deal could have been done but it was not one that C&W was prepared to contemplate. Valuing the two businesses for the purposes of merger was in any case made that much harder by the regulatory uncertainty BT faces in its own home market. Investment bankers came to believe they were dealing with a constantly moving target.
Whatever the truth, it seems a shame. Here was an opportunity to create a company with the critical mass to be up there with the best in the world. The wave of Baby Bell mergers in the US is creating a whole new raft of giant telecommunications companies. As in so many other industries, Britain may well have to reconcile itself to the second and third divisions. BT at least has a fall-back strategy to put it in the first. C&W doesn't even have that. Its new chief executive, whoever that may be, has quite a task on his hands.
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...
£20000 - £25000 per annum + OTE £35K - £45K: SThree: SThree Group have been we...