THUS, C&W Clash Over Energis
THUS says it submitted an £800 million (US$1.45 billion) offer last month and suspended trading of its shares this morning (see THUS Makes Energis Bid). The size of the offer means that THUS, which is valued at around £200 million ($363 million), is proposing a reverse merger by Energis’s owner Chelys (see Chelys Buys Energis's UK Biz). THUS urged Energis not to accept the Cable & Wireless deal until it has considered a “definitive proposal.”
The move was immediately shot down by Chelys, which issued a statement saying “The Board of Chelys carefully considered that proposal but rejected it for reasons of value, uncertainty and deliverability.” (See Energis Rejects THUS Offer.) It added, “There is nothing in today's announcement to cause the Board of Chelys to alter its original view of the greater attractiveness of the committed offer from Cable and Wireless.”
C&W confirmed rumors it was interested in acquiring Energis and said Friday it would take its bid off the table at 5 p.m. Monday unless 75 percent of its debt holders agree to stop blocking the deal in an attempt to extract more cash (see C&W Updates, Confirms Energis Talks). Energis has debts of around £700 million ($1.27 billion). The offer is said to be worth at least £700 million, and Cable & Wireless says it won’t go any higher.
None of the companies are providing further comment.
Credit Suisse First Boston Corp. analyst Richard Barker wrote in a note to investors that Energis is likely to go through with the C&W deal -- it looks a lot less risky and offers more synergy with its operations.
Shares in C&W were down on news of the counterbid but began to crawl back after Chelys issued its statement rejecting THUS’s overtures. It was up 1.71 percent to 163.25 pence in afternoon trading on the London Stock Exchange, after falling 3.57 percent when the market opened.
The impending acquisition of Energis -- by somebody -- points to consolidation that has been a long time coming in the highly-competitive U.K. market. In its update last month, Cable & Wireless noted “market conditions remain challenging,” especially as migration to next-generation IP networks puts further pricing pressure on legacy services. There is also long-standing speculation that the U.K.’s cable operators, ntl group ltd. (Nasdaq: NTLI) and (Nasdaq: TWSTY), are set to merge.
— Nicole Willing, Reporter, Light Reading