Telecom giant C&W acquires Energis for £674M |
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Published
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Wed, 17 Aug 2005 00:35
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LONDON: Britain’s second largest phone company Cable & Wireless has agreed to buy rival Energis in a deal worth £674 million in line with plans to further strengthen its position in the telecoms market.
The privately-owned telecom Energis had earlier received an £800m bid from smaller rival Thus Group which analysts insist, was an attempt to wrench the deal out of C&W’s hands.
According to the terms of the deal C&W will pay £594m in cash now and another £80m, either in cash or shares, to complete the deal in the third year. The acquisition is expected to help cut capital spending and reduce operating costs by £55m a year. The saving thus generated is estimated to increase to £80m in three years. However, the deal would also result in about 700 job losses, the telecom warned.
With the deal C&W also gain Energis’ portfolio of corporate customers like IBM Corp, Tesco (to whom Energis supplied phone and web services); besides BBC, Royal & Sun Alliance and RAC. In addition, the cost savings would give C&W more control over pricing in the highly competitive legacy services.
Thus Group which lost the deal to C&W, despite its higher offer, said it wished C&W well in its acquisition.
C&W which is ranked after British Telecom, is a 133 year-old company spanning many countries. In recent years, the telecom giant’s operations in some countries have been under pressure due to plummeting prices and overcapacity. The company has had to cut thousands of jobs and close unprofitable operations in Japan and the US.
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