Vodafone Gets Approval for C&W Bid as Orbis Drops Opposition

Cable & Wireless Says 58.8% of Shareholders Want Vodafone Offer
The logo of Cable & Wireless Worldwide Plc hangs outside the company's headquarters in Bracknell. Photographer: Simon Dawson/Bloomberg

Vodafone Group Plc won shareholder approval for its 1.04 billion-pound ($1.6 billion) takeover offer for Cable & Wireless Worldwide Plc after the target’s largest investor rescinded its opposition.

The bid was approved by 87.5 percent of Cable & Wireless shareholders who voted at a shareholder meeting today, taking it beyond a minimum threshold of 75 percent, the company said in a statement. Orbis Holdings Ltd., which owns 19.1 percent of Cable Wireless and earlier this year said the offer undervalues the company, today accepted the bid. Cable & Wireless rose as much as 8.5 percent in London.

Vodafone, the world’s second-largest mobile-phone operator, will use Cable & Wireless’s fiber network to boost its fixed-line system in the U.K. and relieve the strain of surging data traffic on its own mobile-phone network as customers increasingly adopt smartphones including Apple Inc.’s iPhone and devices running Google Inc.’s Android. After initially keeping Cable & Wireless separate, Vodafone will move to combine the British network with its own infrastructure.

“Given the amount of synergies available to Vodafone, any integration costs are likely to be more than offset by those savings,” said Nick Brown, an analyst at Espirito Santo in London.

Orbis, based in Hamilton, Bermuda, in April said that the deal is attractive for Vodafone shareholders as it doesn’t reflect Cable & Wireless’ value. Today, the investors said the Vodafone offer would eventually succeed, even if they were to oppose it.

Not Turning Up

“Orbis to be able to block the bid was reliant on other shareholders to turn up and vote no, and that wasn’t likely to happen,” Espirito Santo’s Brown said.

The U.K. is Vodafone’s only major European market in which it lacks a full fixed-line network. Vodafone on April 23 offered 38 pence a share in an offer recommended by Cable & Wireless directors.

Cable & Wireless surged as much as 2.97 pence to 38 pence. and traded at 37.79 pence as of 2:55 p.m., valuing the company at 1.04 billion pounds. The stock never traded above 38 pence since Vodafone made the offer. Separated from its parent company in March 2010, Cable & Wireless was once worth 2.4 billion pounds. Vodafone gained 0.4 percent to 174.30 pence.

Cable & Wireless shares will probably stop trading after July 25, the company said today.

Cable & Wireless, which lost 58 percent of its market value in the last two years, said in May that earnings before interest, taxes, depreciation and amortization in the year ended March 31 fell 15 percent to 378 million pounds, missing analysts’ estimate for 383 million pounds.

Enterprise Clients

Vodafone became the sole bidder for London-based Cable & Wireless after Tata Communications Ltd. in April failed to agree on a price and decided against making an offer. Newbury, England-based Vodafone is pursuing a European fixed-line acquisition for the first time since 2010, when it ended talks to buy Germany’s Kabel Deutschland Holding AG.

Vodafone will double its revenue from enterprise customers with the purchase, while also gaining the largest U.K. fiber system for businesses. Cable & Wireless, tracing its roots to 1866 when the first submarine cable across the Atlantic Ocean was laid, has holdings in more than 60 global cable systems.

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