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.