More than two months after it first admitted its interest, Vodafone Group plc has made an official cash bid for enterprise services and international capacity operator Cable & Wireless Worldwide plc worth £1.044 billion (US$1.68 billion), an offer that has been accepted and recommended by the C&W Worldwide board.

Vodafone is offering 38 pence per C&W Worldwide share, a 92 percent premium over the price on 10 February, the last day before the global services giant announced it was considering a takeover bid. (See Euronews: Vodafone Eyes M&A Opportunity.)

Since then others have evaluated C&W Worldwide, but Vodafone is currently the only bidder. (See Euronews: Tata Considers C&WW Bid.)

The news sent C&W Worldwide's share price up by more than 16 percent to 37.25 pence in early Monday morning trading on the London Stock Exchange.

Vodafone believes C&W Worldwide's operations will help it strengthen its enterprise business in the U.K. and provide it with valuable network assets in the U.K. and internationally that will help reduce its reliance on others' infrastructure and thus help reduce its costs. C&W Worldwide has about 6,000 enterprise and carrier customers globally to which it provides a range of voice and data services, including IP, Ethernet and cloud services. (See C&W Worldwide Wins Cloud Services Deal , C&W Worldwide Bolsters Smart Grid Offer , C&W Worldwide Boasts IPv6 Heritage and C&W Worldwide Extends Videoconferencing.)

In its official bid note, Vodafone notes that C&W Worldwide's U.K. fiber network -- 20,500 kilometers in length and reaching more than 400 cities and towns -- "fits well with the location of Vodafone Group’s UK base stations. As the demand for mobile data continues to grow strongly, the CWW fibre network can provide fast backhaul of data traffic at considerably lower cost compared to prevailing market rates for leased capacity. Cost savings can also be achieved from combining UK procurement and rationalizing network, IT and administrative functions." About 75 percent of C&W Worldwide's revenues are generated in the U.K.

Outside the U.K., the combination of Vodafone Global Enterprise and C&W Worldwide's network -- 425,000 kilometers in length with 127 global points of presence in 35 countries -- would "increase the scope of services Vodafone Group can offer enterprise customers. CWW’s extensive international network and high traffic volumes give it a favourable peering status for IP transit with other operators. Exploiting CWW’s international network capacity in servicing Vodafone Group’s international IP traffic requirements will generate significant cost efficiencies. CWW will also be able to handle part of Vodafone Group’s international traffic that is currently carried by other operators."

C&W Worldwide generated revenues of £2.26 billion ($3.64 billion) and an operating profit of £153 million ($246 million) in the financial year to March 31 2011 but has since issued profit warnings, cut costs, changed its CEO twice and been focused on finding a buyer. (See C&WW Provides H1 Update, C&W Worldwide Names New CEO, Pluthero Back in C&W Hot Seat and Euronews: C&W Worldwide Mulls Asset Sale.)

In the six months to 30 September 2011, C&W Worldwide generated revenues of £1.07 billion ($1.72 billion), down 4.5 percent year-on-year, and reported an operating profit (before one-time costs) of £50 million ($80.4 million), down 35 percent from a year earlier.

Vodafone expects that, should the deal be completed, some of C&W Worldwide's 6,000 staff would be made redundant but said that the number of staff and locations affected have not yet been identified.

— Ray Le Maistre, International Managing Editor, Light Reading