UK regulators gave Vodafone Group (NYSE:VOD, news, filings) more time to decide whether to bid for Cable & Wireless Worldwide yesterday, pushing back its deadline until March 29. That’s the same day Tata is due to make its own decision on a bid, and thus we are set up for a bit of a showdown.
It seems likely that Vodafone is preparing a bid, else they wouldn’t need the extension beyond the original four weeks. But they don’t want to give Tata a target to shoot at with plenty of time to take aim. Now both will probably make their bids, if any, at the last minute. Tata is out there raising money, and hence they do appear to be serious. Cable & Wireless split itself into pieces a few years back in an effort to regain its footing, but has continued to find the going difficult.
The question is, who wants it more? Both Vodafone and Tata have valid strategic reasons why a merger would work, but from different ends of the spectrum. Vodafone would put the UK fiber to good use, complementing the rest of their infrastructure. Tata on the other hand is surely most interested in the international business. Both have the resources for a bid, and both seem to be prepared to take on the integration.
But perhaps the best solution here from C&W Worldwide’s perspective would be to sell to both buyers, splitting the international business from the UK fiber network and enterprise customer base. That might bring the most dollars.
Another bidder could still emerge, but the list of likely candidates doesn’t seem to be getting any longer. The only one I can really make a case for that competes with those of Vodafone and Tata is still Level 3, which would actually see value both sides of C&W’s business. But they are of course currently occupied with the Global Crossing integration, and hence I doubt they will show up. For now it’s a two-company race.
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