Cable & Wireless poised to make improved offer to take over Thus

CABLE & Wireless is expected to announce today that it plans to make an improved bid for Thus, the Glasgow-based telecommunications supplier.

After having its initial indicative 165p a share approach rebuffed by Thus, C&W is believed to have said it could offer the Scottish company's shareholders 180p a share, valuing Thus at just under £330 million.

While both sides yesterday insisted they were not certain an offer would materialise, bankers were last night attempting to thrash out an agreed offer before the markets open today.

"There's a little bit of push and shove on one or two issues, but things are progressing," a source familiar with the situation said yesterday. C&W is already conducting due diligence on Thus's books.

Earlier this month, C&W announced a self-imposed deadline of 5pm today to announce a firm intention to bid for Thus, or walk away.

The "put up or shut up" order was an attempt to force Thus into talks or face the anger of its shareholders should shares fall if a deal could not be agreed. And the tactic worked. After a lull in discussions, talks recommenced last Thursday.

After rejecting C&W's initial approach, Thus is believed to have searched extensively to find an alternative deal. C&W's initial approach, at 165p, was a premium of around 50 per cent to Thus's share price before news of an approach leaked.

Shares briefly rose above that level – as high as 166.25p – on hopes of a bidding war, but have since dropped significantly. At close on Friday, the shares had fallen 6.25p to 145.25p, the lowest level since C&W confirmed it was seeking a takeover.

Bill Allan, who has been chief executive of Thus since before it floated on the London Stock Exchange in 2002, is expected to leave the company if it is sold to C&W. Allan has been a staunch defender of his company, despite never paying a dividend, and an at times vocal critic of C&W, where he was a former senior executive.

But he has remained silent during current talks. It is understood that while he still believes it is possible that Thus could go on to become a major player in the telecommunications business, the lack of a competing bid and the weakness of its shares has left him resigned to a sale.

Executives from most of Britain's corporate telecom providers have said the market needs to consolidate, which would allow prices to rise.

Thus rejected the initial approach as it believed C&W would accrue major synergies from buying it and its shareholders were not being offered a price that fairly reflected this. C&W has described Thus as a bolt-on acquisition rather than a transformational deal. However, Thus has won a string of attractive deals in the past 18 months, which C&W is keen to acquire.

Thus was formed as the telecommunications business of ScottishPower before it was demerged and listed on the London Stock Exchange.

It was briefly propelled into the FTSE 100 index during the dotcom boom.