Vodafone was given a four-day extension to make an offer for Cable & Wireless Worldwide (CW&W). The company now has to table an offer by noon Monday, having already seen rival Tata Communications withdraw from the bidding process.
The decision by Tata to remove itself after having failed to agree an acquisition price with CW&W caused a sharp fall in the CW&W's share price on worries that Vodafone would now be able to offer a lower price, according to the Financial Times.
A UK banker familiar with the telecoms sector, but not involved in the deal, told Reuters that the extension had likely been agreed because Vodafone had offered less than 40 pence per share, and CW&W was keen to hold negotiations open to prevent a further decline in its share price.
Market rumors suggest that Vodafone could offer as much as £700 million for CW&W, reports Mobile Today. However, CW&W, which sells telecoms and Internet services to large organisations in the UK and overseas, has posted several profits warnings over the past 12 months and recorded heavy financial losses in its latest results.
Analysts and CW&W investors told the FT that Vodafone is still interested in acquiring CW&W, believing that there are synergies for Vodafone in gaining control of its fixed-line network in the UK to better support data traffic on its mobile network.
However, Marcus Allchurch, telecoms M&A specialist at BDO LLP, said it remained unclear whether Vodafone would even make an offer, and if they did, much would depend on their assessment of the achievable synergies. "It's still not clear whether Vodafone will even make an offer," Allchurch told Reuters. "In the absence of any competition for CW&W, the trick will be paying enough to secure the asset and no more."
Tata is said by insiders to have been considering an offer of between 30 pence and 40 pence per share, which failed to interest some shareholders wanting a price in the high 40s.
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