Vodafone (NYSE:VOD), the world’s largest mobile phone operator by revenue, has inked a deal to buy corporate telecom giant Cable & Wireless Worldwide for 1.04 billion pounds ($1.7 billion) in cash.
Vodafone on Monday said the purchase would make it the second largest telecom supplier in the U.K., doubling its presence there, while boosting its enterprise business and helping it manage growing demand for data.
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The British telecom giant could use CWW’s 12,738 miles of fiber cables to help ease the pressure on its operations as data traffic from smartphone use continues to skyrocket.
CWW, which is also based in the U.K., said the takeover will help it refocus on achieving sustainable cash generation and returns from invested capital.
“The acquisition of Cable & Wireless Worldwide creates a leading integrated player in the enterprise segment of the UK communications market and brings attractive cost savings to our UK and international operations,” Vodafone CEO Vittorio Colao said in a statement.
Under the terms of the deal, CWW shareholders will receive 38 pence for each of their shares, representing a premium of about 92% from the company’s closing price on Feb. 10, the day before takeover talks were first made public.
CWW, which has been advised by Barclays (NYSE:BCS) and Rothschild, said it considers the offer to be “fair and reasonable.” The company unanimously recommended that shareholders vote in favor of the deal.
Five of CWW’s biggest stakeholders representing 18.58% of its total outstanding shares, including RBC Global Asset Management, Sky Investment Counsel, Cyrte Investments, J.P. Morgan Asset Management and Investec Asset Management, have agreed to vote in favor of the proposed takeover.
UBS (NYSE:UBS) is acting as Vodafone’s sole financial adviser.