James Moore: Why knackered CWW is worth £1bn to Vodafone

Outlook: CWW's assets immediately turn Vodafone into the biggest fixed line provider after BT

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 mobiles 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 shares as it could get its hands on at prices rather bigger than the 38p a share 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.

Majestic's success is an indictment of high street

How on earth did a retailer that sells one of life's little luxuries produce a Majestic set of results against the worst economic backdrop for a generation? The wine merchant that bears that name managed to increase sales from stores open at least a year by 2.6 per cent, profits by 14.5 per cent and customer numbers by 11 per cent.

What's more the average price per bottle sold went up to £7.34 from £6.94, with the average spend per transaction (Majestic makes people buy at least six bottles) ticked up by £2 to £128.

Wasn't it the middle classes who were supposed to be getting squeezed the most? Perhaps they're just drowning their sorrows.

Perhaps they just like dealing with a retailer whose staff seem to have a genuine love for the product and usually do their damnedest to find customers something they might like if given a few vague details and a budget.

Majestic's success at a time when people are feeling the pinch is actually something of an indictment of the rest of the high street because it demonstrates how retailers have forgotten a business truism: give your customer a bit of love and they'll happily hand you a lot of money.

Majestic should have a care, though. The wine trade is littered with the names of rivals about whom oenophiles enthused only to see them falling by the wayside.

It is expanding rapidly and it would be oh so easy for the business to lose its touch. There's nothing like hiring a few MBAs or former investment bankers with time on their hands to run things (or just to "strengthen the board" as non-executive directors) for things to start sliding.

These people have a habit of asking awkward questions. Like, why are we spending so much getting our shop staff drunk (sorry, acquainted with our product)? Or, why don't we get them to push Chateaux Malheur? I know it's a bit more ordinary than Bonny Doon's Bloody Good Red but the margins are stellar.

Answering those sorts of questions wrongly will turn a majestic business into a moribund one just as quickly as an unwanted takeover by a multinational drinks group with more money than sense (see Oddbins for details).

Start your day with The Independent, sign up for daily news emails
Voices
Barn owls are among species that could be affected
charity appeal
News
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Sport
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
Life and Style
food + drink
PROMOTED VIDEO
News
i100
Arts and Entertainment
a clockwork orange, stanley kubrick
filmSony could have made a cult classic
Life and Style
fashionThe essential guide to all the designer Christmas sale dates
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
news... you won't believe how bad their skills were
News
people

Arts and Entertainment
Mark Wright and Mark Wright
tvStrictly goes head-to-head with Apprentice
Sport
footballPremier League preview: All the talking points ahead of this weekend's clashes
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas