The Sunday Times yesterday revealed that “Vodafone is considering a £700m takeover bid for Cable & Wireless Worldwide”. The mobile giant has this morning confirmed that “it is in the very early stages of evaluating the merits of a potential offer for CWW”. All of which has put no less than 28% on CWW’s share price this morning (although, to put that in context, the value of the company is still down 70% over the past 12 months).
There is no doubt much frustration at Vodafone (share price up 1% this morning, incidentally) that this got out. It has a good number of people looking at a good number of M&A opportunities at any one time, and here’s one that leaked out. It’s worth noting that Vodafone will not be the only player interested in CWW, especially given its slumped valuation. Indeed The Sunday Times quotes Apax Partners as another interested party, and no doubt there are more sniffing around from both the industry and private equity.
But for Vodafone specifically we’d have to question the wisdom of a potential purchase of the whole of CWW. CWW is not in the best of shape, following a 2011 marked by profit warnings and changes at the top (see C&W Worldwide CEO departs on profit warning). Naturally Vodafone is aiming to increase wallet share from its enterprise and public sector customers. But buying an operation that still needs whipping into shape could be the hard way to go about it, especially when it covers services that would be outside Vodafone’s comms-centric comfort zone. Besides, it’s notoriously hard to make money from the sorts of corporate ICT services that CWW provides – just ask BT Global Services.