C&W rebuffed after £113m Bermuda bid

A £113m bid by Cable & Wireless's better-performing international business to acquire KeyTech, the company that owns Bermuda's incumbent network, has been rebuffed.

However, the move to bulk up C&W's operations in Bermuda is unlikely to divert attention from today's annual shareholder meeting when group management will try to defend its contentious private equity-style bonus plan for its top management.

Over recent months, Cable & Wireless has been in the spotlight after Richard Lapthorne, the chairman, unveiled a dazzlingly lucrative incentive scheme for management. In the UK, C&W decided to pull out of the UK consumer broadband market to concentrate on improving its performance in the challenging corporate telecoms sector.

Yet C&W's international business, a legacy of its colonial past, operates a string of mobile and fixed-line businesses in 33 relatively small markets around the world. It recently bought assets in Monaco and Guernsey.

KeyTech has rejected C&W's overtures, despite the cash offer representing a 35 per cent premium to its average share price over the past 30 days. The two businesses are considered to be complementary as C&W's existing Bermuda business, which has operated for 115 years, specialises in carrying international traffic in and out of the island, while KeyTech runs the domestic fixed-line and mobile network. Jim McCafferty, at Seymour Pierce, said the deal was earnings accretive at current levels and consistent with C&W's skill set.

The prospect of an increased bid for KeyTech is unlikely to be the focal point of today's AGM with investor groups such as the ABI and Pirc criticising C&W's incentive scheme.