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C&W plays down bid talk
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July 5, 1999: 7:30 a.m. ET
U.K. telecom's stock soars; company won't comment on takeover reports
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LONDON (CNNfn) - British telecommuications provider Cable & Wireless attempted to play down talk of an imminent takeover bid Monday, despite a 5 percent jump in its shares after four companies were linked to a bid.
Media reports over the weekend said Cable & Wireless had turned down offers in recent weeks from Deutsche Telekom (FDTK), France Telecom (FDTE), Bell Atlantic (BEL) and SBC Communications (SBC).
C&W declined to comment on the speculation, but insisted it was not the source of the reports. The reported bidders also declined to comment.
Cable & Wireless shares soared 5.76 percent to 829 pence in heavy morning trading despite the denials. Analysts said its breadth of assets made a full or partial sale a near certainty, but noted that the company would prefer to sell businesses individually.
The company has already instituted a strategic review which will involve the sale or auction of its 50 percent stake in One2One, Britain's fourth-largest cellular operator, in which MediaOne also has a 50 percent stake.
Deutsche, Mannesmann (FMMW) and France Telecom have all been linked to a possible purchase of One2One, which Cable & Wireless mortgaged last month.
Cable & Wireless has been under severe pressure from investors in recent months as its share price has wallowed well below the potential break-up value of its core businesses.
Monday's share price surge lifted the company's market value to around 19.7 billion pounds ($31.6 billion), but One2One alone has been valued at up to half that amount.
Chief executive Graham Wallace acknowledged the valuation problem at the company's shareholders' meeting in May, and said reducing the gap was a priority. He said the company would focus on developing its Internet and data unit, Cable & Wireless Communications, and seek to dispose non-core assets including One2One.
C&W boosted its Net business Monday with the purchase of Britain's largest independent ISP, Network Services Group, for an undisclosed sum.
While the cellular unit is already in play, analysts said C&W's broad range of assets and international spread offered aspiring global telecom players a fast-track route to match the global aspirations of British Telecommunications (BT.) and AT&T (T), which are instituting their own worldwide pact.
The key assets include its stake in Hongkong Telecom and Australia's Optus as well as control of Japan's IDC -- gained after a bitter two-month takeover battle concluded in June.
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Cable & Wireless
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