Cool response to C&W bid
Jul 1 2008 by Iain Laing, The Journal
TELECOMS group Cable & Wireless made a £329m takeover bid for Thus yesterday which was met coolly by its smaller rival. C&W has put forward a higher 180p-a-share offer after its initial 165p-a-share approach was turned down by Glasgow-based Thus late last month.
But the board of Thus said that while C&W’s offer was worthy of consideration by shareholders in the absence of a better proposal, it would not be recommending it to investors. “It is the Thus board’s view that the offer is not such a compelling proposal that the board could give a recommendation to shareholders to accept the offer at this time,” it said in a statement.
The larger company said that it believed the offer was an attractive reflection of Thus’s value.
Richard Lapthorne, chairman of C&W, said: “Today’s offer represents a generous premium of 64% to Thus’s share price before our approach and we believe is an attractive proposal for Thus shareholders which unlocks significant value.”
The group gave itself until yesterday to tempt Thus into takeover talks after its initial £302m proposals were rejected.
Thus is understood to have opened its books to C&W after pressure from shareholders, but is said to have been frustrated with C&W’s position on price.
The suitor had earlier told Thus that it was only prepared to discuss an agreement within a narrow price band of the 165p-a-share indicative offer.
Thus had reportedly been lining up two possible white knights to fend off C&W’s unsolicited approach, with Global Crossing and Colt Telecom said to have been in the frame.
However, discussions between Thus and C&W are believed to have been kick-started last week after C&W chairman Lapthorne met with his counterpart at Thus, Philip Rogerson, to put forward the improved bid proposal. Thus stuck by its initial response to C&W’s advances saying that it continues to remain confident in the stand-alone prospects of the company.
It added that it was also keen to take part in the active consolidation within the telecoms sector. Thus claimed on rejecting C&W’s initial advances that its net asset value was £461m as of the end of March, which equates to 252p a share.
The group – part of Scottish Power until its stock market flotation in 1999 – owns Demon broadband.
It employs more than 1,700 people and late last month posted its first annual operating profits, with a £4m surplus for the year to the end of March, compared to an £11.1m loss previously.
