Shareholders call on C&W to explain bid rebuff
By Robert Budden, Tony Tassell and Juliana Ratner in London
Published: February 6 2003 19:49 | Last Updated: February 6 2003 19:49
Leading shareholders in Cable and Wireless on Thursday called on the company to explain why it had rebuffed an approach earlier in the year from Pacific Century Cyberworks, the Hong Kong-based telecommunications operator, headed by Richard Li.
Following revelations that PCCW is prepared to offer up to £1 a share for the company - a substantial premium to Thursday's C&W closing price of 63½p, up 5¾p - one main investor called on the company to issue a formal statement to the markets.
"They do need to go to some lengths to explain why they did not enter negotiations," he said.
He added :"The way they handle this situation will prove an acid test for shareholders' trust. They need to get their side of the story out there in the markets."
Morley Fund Management, another big shareholder in C&W, added that the telecoms operator should have disclosed the interest.
"Our board principle is that it is better for companies to disclose an approach even if may not lead to a serious bid. Let the market decide how important it is," said Ross Courtier, head of shareholder activism at the fund manager.
However, some other investors were more forgiving of the company. One top-ten shareholder said it was right for the C&W board not to have disclosed the approach.
"Phantom bids should be discouraged," he said. "There is an element of shaking the tree about them to see what falls down and try to get access to a company's books. It wastes a huge amount of management time. If they want to make a bid, there is public information out there and they should put something on the table."
The unease among some shareholders came as it emerged that Texas Pacific Group, along with three banks, was ready to support a PCCW bid.
Under a deal, PCCW would take charge of C&W Regional, the group's profitable fixed line and mobile businesses heavily focused on the Caribbean, while TPG would look at further restructuring of C&W Global, the telecoms group's lossmaking carrier of internet traffic.
TPG has built up an enviable reputation in the US buy-out community as a distressed investor.
Most buy-out firms are growth investors so TPG now finds itself in a potentially lucrative, relatively uncrowded niche.
TPG has traditionally had a strong airline expertise and one of its strengths is financial restructuring. Additional reporting by Robert Clow in New York.
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