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UK Telecommunications company Cable&Wireless (C&W) has seen shares surge following news that its board rejected a takeover of its overseas assets by Hong Kong and Singapore-based telco Pacnet last week.
Its shares rose by 2.1 pence to 52.5 pence Friday after it was announced C&W rejected a US$500m bid by Pacnet for Cable&Wireless Worldwide (C&WW), which has a presence in the Asia Pacific, India, Middle East, Africa and the US.
It follows a year that has seen the company’s share price drop by 48%, sparking profit warnings.
C&WW, however, brought in US$3.49bn in revenue in the year ended 31 March 2011.
Pacnet CEO Bill Barney told CNBC he thought C&W would strategically fit in with Pacnet’s goals for growth. It is thought Pacnet could be especially interested in C&WW’s network in India, with Barney having said in the past Pacnet is interested in growth in South Asia – a region he claims is an up and coming communications hub.
“We own two thirds of the network assets in Asia, so anyone who has a fairly large revenue pool, you put them on top of our assets, there’s a tremendous synergy opportunity,” Barney told CNBC.
Brokers are saying the news of Pacnet’s offer shows telecommunications companies are now looking to grow though acquisition.
Pacnet CEO Bill Barney said it had an unreserved amount set aside for the purchase of other telecommunications players that fit its bill for expansion.
Cable&Wireless was spun off from Cable & Wireless Group last year and a report by the Financial Times last week suggested the company was looking to remove its global operations to concentrate solely on the UK, and bring in costs.
AT&T, Singapore Telecom (SingTel) and France Telecom have also shown interest in the company in the past, reportedly making bids of their own.