Earlier this month, C&W made a hostile bid for THUS valuing the company at just under $600M including net debt, and while THUS rejected it C&W are forging ahead anyway. For those unaware, THUS is a UK network provider that does about $1B in annual revenues and has about 100M in ebitda while still burning some cash but not as much as it used to. Give or take a bit of course. Today reports emerged that Global Crossing and Colt are considering entering the bidding. Well, the UK market has been need of further consolidation for some time now, and one must expect that THUS is simply holding out for a better price.
I don’t think Global Crossing is going to be the one to do it, while GCUK remains a strong business and it would combine well with THUS, the parent company is not yet healthy enough to raise that kind of money at reasonable rates. To put it simply, C&W ought to be able to outbid GLBC any day of the week if they want to – and making a hostile bid implies they probably do want to. But Colt is another story, I think that if they make a bid it could be a serious challenge to that of C&W.
I do think it would be a mistake to dismiss other suitors. Other USA operators such as Level 3 may be unlikely right now, but Reliance Globalcom and Tata come to mind as potential bidders with big checkbooks.
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