LONDON (Reuters) - Telecoms company Cable & Wireless CW.L made an improved 329 million pound cash offer for rival Thus THUS.L on Monday, but Thus said it was not prepared to recommend the bid to shareholders.
C&W, Britain’s second-biggest corporate telecoms provider, also revealed it had snapped up a 29.9 percent stake in Thus, the maximum amount it is allowed to buy without a recommendation under UK takeover rules.
The 180-pence-a-share bid replaces an earlier proposal of 165p per share, which Thus rejected as too low on June 6.
Thus shares shot up 28.7 percent to 174 pence by 11:40 a.m., while C&W shares were 3 percent higher at 150.4 pence.
In a statement, Glasgow-based Thus said it had agreed to put the offer to shareholders, but that the bid “is not such a compelling proposal” that it would recommend that investors accept it.
“The Thus Board considers that this improved offer represents a proposal worthy of consideration by shareholders in the absence of a better proposal,” the company said.
Analysts said Thus was unlikely to fetch more than 180 pence unless another bidder came forward.
“We feel that in this environment Thus’s management would have to work hard to justify a share price above 180 pence on an organic basis,” Landsbanki analyst Dan Gardiner wrote in a research note.
C&W said its bid represented a 64 percent premium to Thus’s closing share price on May 27, the day before C&W’s interest in the group became known.
C&W wants to buy Thus in order to take over its portfolio of large business and government customers. The company has also said the deal would generate unspecified cost and capital expenditure savings.
Thus is led by chief executive Bill Allan, a former executive at C&W.
Reporting by Myles Neligan; Editing by Paul Bolding