Cable & Wireless Communications Plc agreed to buy 51 percent of Bahamas Telecommunications Company for $210 million to prop up its ailing Caribbean business. The stock rose as much as 3.6 percent in London trading.
The company signed a non-binding memorandum of understanding with the government of the Bahamas and aims to complete the transaction in the first quarter of 2011, Cable & Wireless Communications said in an e-mailed statement today. The company and the government will work together to complete due diligence, finalize terms and obtain regulatory clearances.
Cable & Wireless Communications on Nov. 4 had its biggest drop in London trading since splitting from its parent company in March after it reported profit and sales that missed estimates. First-half sales in the Caribbean dropped 6.1 percent from a year earlier while earnings before interest, taxes, depreciation and amortization declined 13 percent.
Bahamas Telecommunications is the leading mobile-phone, fixed-line and broadband operator in the Bahamas, a member of the Caribbean Community trading bloc, and will complement Cable & Wireless Communications’ business in the region, according to the statement.
Cable & Wireless Communications shares rose as much as 1.61 pence to 45.98 pence and were up 2.6 percent at 45.5 pence as of 8:06 a.m.
Bahamas Telecommunications “represents a great opportunity to expand our business in a region where we have competitive strength and management capability,” Chief Executive Officer Tony Rice said today. “This opportunity would fit with our strategy to develop the business through market leading and cash generative businesses.”
Rice said in November that he does not expect the Caribbean economy to recover during the fiscal year.
The acquisition of Bahamas Telecommunications will be funded from existing cash and debt facilities and is expected to be earnings and cash flow accretive excluding restructuring expenses, Cable & Wireless Communications said.
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