If it does go for it, Tata is expected to offer something in the region of £1bn for CWW, which would make it the biggest acquisition by an Indian firm since – well, since Tata acquired JLR back in 2008. And you can see why it would be a good fit: Tata owns one of the world’s largest undersea cable networks, while CWW’s undersea cables are estimated to be worth about £650m. Although its high-speed telecoms services (valued at about £1bn on its own) is what Vodafone has been sniffing around. So if the two companies do go head-to-head, things could get ugly.
All this interest has been sparked by a collapse in CWW’s share prices since it split with Cable & Wireless Communications in 2010. Ironically, when Vodafone declared its interest two weeks ago, prices rose by a third, while Tata’s interest pushed them up by another 18% this morning, causing CWW’s value to rocket from £500m a fortnight ago to £900m this morning. Which would explain why both companies are both trying to look as aloof as possible about a prospective buyout before takeover rules mean they absolutely have to declare an interest (March 12 is the deadline for Vodafone, March 29 for Tata).
But anyone who takes control of CWW will need to give it a lot of TLC. It made a £433m loss in the six months to September, which CEO Gavin Darby put down to under-investment. The worrying thing for Darby et al is that there have been whispers that the company would be worth more if it were broken up – although apparently, extracting the undersea cables from the rest of the business would be extremely difficult. So it might be easier to just buy it whole. Although an acquisition is by no means guaranteed. After all, it’s the company of which former CEO John Pluthero wrote in an all-staff email back in 2006: ‘we work for a failing company in a crappy industry’. Very motivational.