Two of the major industry players attempting to bid for Cable & Wireless Worldwide have expressed their wish for the submission deadline to be extended. Vodafone Group and Tata Communications are both attempting to acquire C&W and have requested that they be allowed to submit bids beyond the current deadline of March 29th.
Reportedly, the potential buyers do not feel that they have sufficient knowledge of CWW’s operations to make an informed decision over whether to submit a bid, as the provider’s senior management has failed to make clear all the necessary information. In addition, CWW’s management has had to extend Vodafone’s initial deadline to match Tata’s.
Tata reportedly has reportedly taken out a loan worth around US$2 billion, having recently stated its interest in acquiring CWW. The firm is believed to have signed up Morgan Stanley to oversee the deal.
Meanwhile, it is reported that disputes over the potential acquisition have divided Vodafone’s board, with some directors expressing concern that Vodafone’s brand could be tarnished by purchasing a company with over £5 billion of tax losses in the UK.
Due to its losses, C&W is owed huge tax rebates which would compensate Vodafone for the cost of the acquisition. However, while such a ‘tax holiday’ would technically be legal, it could also be an unpopular enough move to damage the Vodafone brand.
Vodafone CEO Vittorio Colao is reportedly in favour of making the acquisition due to the business case, but faces opposition from deputy chair Sir John Buchanan, who is apprehensive over the ramifications for the firm’s reputation.
CWW is an offshoot of Cable & Wireless Group formed in March 2010. Despite issuing three profit warnings since its formation, the firm appears to have an allure for both bidders – Vodafone will be attracted to the firm’s fixed-line network in the UK, while for Tata the main attraction is the 425,000km of undersea cable owned by CWW.