- The Observer,
- Sunday December 15 2002
Cable & Wireless, the troubled telecommunications company, is facing a £1.5 billion break-up bid from Thus, a rival operator, backed by private equity firms.
According to City bankers, Thus is working on an outline project that would see it take over Cable & Wireless's former Mercury telephone network in the UK, while the private equity groups would acquire C&W's lucrative Caribbean operations. A spokesman for Thus said: 'We do not comment on market speculation.' The bankers say that no formal offer for C&W has yet been tabled and that 'these are early days.' But they believe a bid is a real alternative to a change of management at the company, a process that could take months.
Under the Thus project, C&W's troubled Global unit, which offers internet and data services to corporate customers, could be given away to an international telecommunications group with a big balance sheet, such as NTT of Japan. The unit has been 'bleeding cash.'
The break-up plan has attracted interest from private equity groups that include Apax, Permira, and WestLB, the German banking group that made an offer for Railtrack last year. Robin Saunders, WestLB's star dealmaker, is thought to be 'mon itoring developments at C&W', said a source.
Thus could not make a bid on its own because it its share price is too weak to enable it to raise funds on the capital markets.
Leading shareholders in Cable & Wireless are demanding an investigation into the company's recent admission that it could face a £1.5bn tax bill. Shareholders want management changes, starting with the departure of Graham Wallace, chief executive.
