By acquiring CWW, Vodafone will not only gain its own wireline-based wireless backhaul network, but also a sizeable business services arm that serves both UK-based and international business customers. Prior striking the deal for CWW, Vodafone had to rely on BT (NYSE: BT) and CWW for wireless backhaul services, something it needs in order to meet rising of consumer use of data-centric wireless services.
"There is a good overlap between Cable & Wireless' fiber network and our base stations which will significantly reduce the cost to us of managing the growth in data traffic," said Vittorio Colao, Vodafone CEO, in a call with analysts, adding that the deal "positions us very well to capture the growth demand for unified data services in enterprise."
Under the terms of the agreement, which was struck after Vodafone asked for a four-day extension from the UK's Panel for Takeover and Mergers, CWW shareholders will be offered 38 pence per share in cash.
Times have been tough for CWW ever since the service provider split into two separate companies in 2010. In addition to issuing three profit warnings, the service provider saw three CEOs leave the company.
Vodafone wasn't the only potential bidder on CWW. India's Tata Communications opted out of the race for CWW last week when it could not agree on a price for the service provider.
CWW shares traded 12.5 percent higher at £36.00 ($57.97) by 11:25 a.m. EDT, while Vodafone's shares remained stable on both the London exchange and Nasdaq.
- Reuters has this article
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