Vodafone Group has agreed to takeover Cable & Wireless Worldwide (C&WW) for £1.04bn.
The operator said the deal for the telecoms firm would 'strengthen the enterprise business of Vodafone Group in the UK and internationally, and presents attractive network and other cost saving opportunities'. It would also help the company capitalise on the growing demand for unified communications services in the UK, it added. CW&W's UK fibre network will provide Vodafone with a fast backhaul of data traffic at a much lower cost.
The deal was confirmed this morning (23 April) with Vodafone Group paying 38p per share, the equivalent of a 92% premium for shareholders. Tata dropped out of the running to take over C&WW last week.
Vodafone Group CEO Vittorio Colao said: 'We are pleased to reach agreement with the board of Cable & Wireless Worldwide, who unanimously recommend our offer. The acquisition of Cable & Wireless Worldwide creates a leading integrated player in the enterprise segment of the UK communications market and brings attractive cost savings to our UK and international operations. We look forward to working with the management and employees of Cable & Wireless Worldwide to combine our expertise for the benefit of our customers and shareholders.'
C&WW chairman John Barton said: 'Under the leadership of Gavin Darby, Cable & Wireless Worldwide has outlined a strategy to refocus the business on achieving sustainable cash generation and returns from capital invested. However, the offer from Vodafone announced today will enable shareholders to crystallise a value, in cash, that represents a significant premium to recent trading levels and avoid exposure to the risks inevitably presented by executing a medium-term improvement strategy. Furthermore, the combination with Vodafone represents an exciting opportunity for Cable & Wireless Worldwide’s customers, employees, partners and other stakeholders to benefit from the many advantages that will come from being part of the Vodafone Group.'
The Communication Workers Union raised concerns about job losses. Andy Kerr, CWU deputy general secretary, said: 'We would hope that because of the different nature of the work that the two companies undertake – mobile versus fixed line – that there wouldn’t be too large a reduction in the workforce. The limited duplication of work could be in the best interests of job retention within both companies.'
David Molony, principal analyst at Ovum, said the acquisition could transform Vodafone into a 'major world telco' because of its global network of fixed and mobile services. He said: 'This is a major step up in global services for Vodafone, which will now have significant new enterprise customers worldwide, as well as the substantial international network systems and relationships that CWW has built up over many years. For CWW this goes a long way to securing the company's position as number 2 business services provider in the UK, with potential funding for its ageing data centre network, while giving its global network a new mission statement - to take unified communications to global MNCs and large enterprises worldwide and to expand services in emerging markets in particular.'
Editor: Graeme Neill