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Telekom eyes $50B C&W?
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July 5, 2000: 7:31 a.m. ET
Report: German firm close to takeover offer for UK telecom operator
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LONDON (CNNfn) - Deutsche Telekom AG is set to launch a takeover bid of more than $50 billion for Britain's Cable & Wireless PLC, according to a published report Wednesday.
German financial magazine Focus Money reported that a deal was imminent, citing Telekom sources, and said the proposed takeover was the principal reason for the company's world record $14.6 billion bond issue last week. Focus reported the money would provide the cash element of an offer for C&W.
Focus said recent changes in Telekom's organizational structure were also aimed at preparing for the integration of C&W. 
A Telekom spokesman declined to comment on the report to CNNfn.
Analysts were skeptical the deal could come off, although they noted C&W would probably be a good fit for Telekom.
"C&W could be a nice fit, because it would provide Internet protocol assets in the United States, it has sorted out its Asian exposure, and it is cheap relative to other similar companies," said Jonathan Shantry, European telecom analyst at Crédit Lyonnais Securities in London.
However, Shantry said the presence of the German state as Telekom's largest shareholder would be a major hurdle to a deal with C&W. C&W shareholders might be reluctant to take shares in what is seen as a state-controlled entity.
"Deutsche's definitely looking to buy something," Shantry told CNNfn.com, although he pointed out the market was awash with daily rumors of a deal involving companies such as U.S.-based Sprint Corp. (FON: Research, Estimates), Equant NV (PEQU) and Qwest Communications International Inc. (Q: Research, Estimates).
C&W has streamlined its portfolio of widely spread telecom assets over the past 18 months, concentrating on building a global network for Internet traffic and business customers.
The company agreed earlier this year to sell its majority stake in C&W Hong Kong Telecom, the former monopoly telecom service provider in Hong Kong, and has also offloaded U.K. cable assets. Last year it sold half share in cellular operator One-2-One - to Deutsche Telekom.
At Wednesday's share price the company has a market value of £34.3 billion ($52 billion).
Telekom chief executive Ron Sommer received permission from shareholders earlier this year to raise up to $95 billion in new capital, and has made no secret of his desire to expand outside Germany.
Investors appeared to be taking the report seriously. C&W (CW-) stock jumped almost 7 percent in London to 1,239 pence, while Telekom (FDTE) rose 4 percent to  58.40 in Frankfurt. 
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