Rumour Mill: Will Vodafone, O2 bid for C&W Worldwide?

The bombed-out share price of Cable & Wireless Worldwide (C&W Worldwide) could attract bids from larger mobile operators wanting to offload their surging data traffic to the struggling company's extensive fibre network.

According to a Reuters report, possible bidders include Vodafone, O2, AT&T and Verizon Wireless, each of which could take advantage of C&W Worldwide's fibre infrastructure, relationships with multinational companies and its substantial unused tax allowances.

Shares in C&W Worldwide have been trading on the London stock exchange at historic lows; the company issued two profit warnings in the past eight months amid growing worries over whether its existing management can implement a turnaround.

A banker familiar with the sector told Reuters that C&W Worldwide ultimately wants to be acquired by one of the larger operators. "And its valuation is getting more attractive as the stock comes down, but (I believe) the company needs a good year of solid results before it is a credible target."

However, Investec analyst Morten Singleton suggested that an operator should be brave and make a move for the company now. "I see no reason why an acquirer would not be interested in it now, given where the share price is trading, because I believe fundamentally the enterprise value of the business at the moment is less than the assets are worth," he said.

"There is an inevitability about a degree of consolidation in the U.K. and this would be an obvious candidate. For something like Vodafone, it makes a lot of sense," he added.

C&W Worldwide, which is valued at around £1.25 billion, became independent from C&W Communications in 2010. It provides voice, IP and data services to multinational firms and governments.

For more:
- see this Reuters article

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