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Tata Communications Ltd (TCL) has pulled out of the race to buy out London-listed Cable & Wireless Worldwide (CWW), the Indian global telecommunications company said on Wednesday. The reason it cited was failure to agree on a price.
The announcement was made just a day before the deadline for putting in the bid ends on Thursday at 5pm GMT.
“TCL on Wednesday confirms that it has been unable to reach an agreement with C&W Worldwide on an offer price, and therefore, confirms that it does not intend to make an offer for C&W Worldwide,” an official statement of the company said. TCL and Vodafone plc were the only two companies in the race to buy out the company. The UK telecom company, though, is still in talks to buy out the company.
Last month, TCL had said it was looking to make a cash offer to win control over Britain’s largest business fibre network. This would help the Tata company to expand its global telecommunications footprint.
TCL, founded in 1968, had made a statement to the stock exchanges, confirming its interest in the MNC, headquartered in Berkshire’s Bracknell and valued at around $1.2 billion (Rs 5,880 crore). C&W, incorporated in 1860, has operations across various countries and provides both voice and data services.
TCL had hired Morgan Stanley and Standard Chartered as its long-term adviser on the deal and had secured finance from State Bank of India and a consortium of lenders led by Standard Chartered. According to sources, the company was planning to raise $2billion to finance the acquisition.
After the announcement by Tata, made in accordance with the UK City Code on Takeovers and Mergers, stock prices of both companies rose. TCL’s stock closed at Rs 234.40 per share, 2.25 per cent higher than the previous close. TCL is a loss-making entity, and has a debt of $1.6 billion (Rs 7,840 crore).
Tata Communications is a leading global provider communications with a large presence in the emerging markets. The Tata Global Network includes one of the most advanced and largest submarine cable networks, a Tier-I IP network, with connectivity to more than 200 countries and nearly a million square feet of data centre and colocation space worldwide.
Tata Communications’ depth and breadth of reach in emerging markets includes leadership in Indian enterprise data services, leadership in global international voice, and strategic investments in South Africa (Neotel), Sri Lanka (Tata Communications Lanka Limited), and Nepal (United Telecom Limited). The acquisition of CWW would have given it a presence in the European market.
CWW, on the other hand, has an international cable network spanning approximately 425,000 km in length connecting over 150 countries – either directly or indirectly through business partners. It also owns Britain’s largest fibre network, connecting 400 towns and cities in that country.