UPDATE: Cable & Wireless Agrees To Vodafone Offer

Mobile communications giant Vodafone Group PLC (VOD.LN) Monday agreed to buy ailing U.K. telecoms operator Cable & Wireless Worldwide PLC (CW.LN) in a GBP1.04 billion recommended cash deal, which significantly improves its U.K. network infrastructure and supports its continuing strategy of boosting its business offering around the world.

The deal, which in part takes advantage of the damage to Cable & Wireess Worldwide's share price following a series of setbacks since it listed in 2010, is also aimed at improving Vodafone's network coverage in the U.K. and supporting its enterprise business around the world.

The 38 pence a share offer is a 92% premium to Cable & Wireless's undisturbed share price before Vodafone declared its interest in February. It comes a few days after India's Tata Communications Ltd. (TCL) withdrew its interest in Cable & Wireless.

"The acquisition of Cable & Wireless Worldwide creates a leading integrated player in the enterprise segment of the U.K. communications market and brings attractive cost savings to our U.K. and international operations," Vittorio Colao, chief executive of Vodafone, said in a press statement Monday.

Vodafone had until 1100 GMT on Monday to make a bid for C&W Worldwide or walk away after the U.K. Takeover Panel on Thursday extended the deadline for a third time.

Tata Communications said after the close of trade Wednesday that it wouldn't make an offer for C&W Worldwide after failing to agree on a price with the U.K.-based company. The disappointing news pushed C&W World's shares down as much as 24% during Thursday's trade on the London bourse, following widespread press reports suggesting Tata Communications had raised finance for the bid.

On Feb. 13, Vodafone said it was in the very early stages of evaluating a takeover bid for C&W Worldwide--which counts U.K.-based telecommunications operator BT Group PLC (BT.A.LN) as one of its biggest rivals--following press speculation. A few weeks later, Tata Communications said it too was mulling a bid for the company.

C&W Worldwide owns the U.K's biggest fiber network dedicated to businesses. It also has an international cable network that reaches across Europe, India and throughout Asia. But it has had a tough time since its spinoff from parent Cable & Wireless PLC in 2010, suffering a sliding stock price and several management changes.

Vodafone said Monday it had irrevocable undertakings from approximately 10.35% of C&W Worldwide's shareholder to vote in favor of the offer, including RBC Global Asset Management Inc., Sky Investment Counsel Inc. and Cyrte Investments GP I B.V. Vodafone said it has support from an additional 8.13% of C&W Worldwide's shareholders.

John Barton, the chairman of C&W Worldwide, said in a statement that while the company's strategy was on track, the Vodafone offer would allow shareholders to "crystallise a value, in cash, that represents a significant premium to recent trading levels and avoid exposure to the risks inevitably presented by executing a medium-term improvement strategy.

Shares in Vodafone opened slightly lower Monday and at 0741 GMT were trading down 0.1% or 10 pence at 171.4p, while C&W Worldwide shares were leading the FTSE 250 risers, up nearly 17% at 37p.

Vodafone was advised by UBS, supported by brokers Citigroup (C) and JPMorgan Chase & Co. (JPM). C&W Worldwide was advised by Barclays PLC (BARC.LN), N.M. Rothschild, with brokers Jefferies & Co. and Deutsche Bank. A.G. (DB.

-By Jessica Hodgson and Lilly Vitorovich, Dow Jones Newswires; + 44 207 842 9373; jessica.hodgson@dowjones.com

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