THUS, the Glasgow telecoms group, grudgingly moved towards a takeover yesterday after industry giant Cable & Wireless upped its offer to 180p-a-share, or some £329 million, and bought a major stake in the Scots business.
C&W was granted access to Thus's books last week and quickly began building a major stake in its rival, revealing yesterday that it had spent almost £100m acquiring a strategic 29.9 per cent stake after approaching institutional shareholders.
Th
e move allows those institutions to receive the money immediately, and the ease with which C&W built the stake – the most it can get to under the terms of its bid – suggests that a large proportion of Thus shareholders believe there will be no higher counterbid.
Amber Capital, Thus's largest shareholder, with 10 per cent, and Dutch company Cyrte, which held around 8.5 per cent, are among those who sold up to C&W.
However, sources at Thus said not all shareholders who were approached had accepted. Aberdeen Asset Management has sold only half of its 4.2 per cent stake. Meanwhile Columbia Ventures and Investec, Thus's second and fourth-largest shareholders respectively, apparently rejected the initial offer. Shares in Thus leapt close to the offer price, closing up 31.75p, or 22 per cent, at 177p. C&W shares added 3.4p to 150.8p, on relief the company was not overpaying for Thus.
Richard Lapthorne, the chairman of C&W, said the offer was a "generous premium... and we believe is an attractive proposal for Thus shareholders which unlocks significant value".
Unusually, while Thus is putting the offer to shareholders, its board is not yet advising them on how to vote.
Bill Allan, its combative chief executive and a former C&W executive, was unavailable for comment yesterday, remaining silent throughout the bid process.
After sharply rejecting C&W's earlier 165p-a-share approach, Thus said the increased cash offer was not such a "compelling proposal" that it would recommend shareholders should accept, but it was "a proposal worthy of consideration by shareholders".
A spokesman said while the stance was "unusual", it is likely the situation would occur more in the future.
"There are quite a lot of small cap companies whose shares have been so hammered by the market that what appears to be a healthy premium isn't necessarily regarded by the board as full and fair," he added.
C&W's offer is a 64 per cent premium to Thus's share price prior to C&W's interest emerging. However, it is less than the level at which Thus shares were trading at 12 months ago.
It is understood that before the first closing date for acceptance on the bid, the board of Thus will formally advise shareholders on whether or not to accept it.
A source accepted that 180p "appears to be the price at which the company will change hands".
Landsbanki analyst Dan Gardiner noted that while some larger shareholders may want to hold out for a higher bid, a large proportion would accept, with a rival bid unlikely.
He said: "Although Thus shares were trading higher than this level last year ... we feel in this environment Thus's management would have to work hard to justify a share price above 180p on organic basis."
Gardiner has predicted C&W may be able to make annual savings of at least £59m from combining its corporate telecoms business with Thus, with the merger expected to lead to a 10 per cent reduction in combined headcount.
Thus has some 1,700 employees, around half based in Scotland. It is likely that Glasgow, where Thus is based, will face the brunt of any redundancies.
The full article contains 624 words and appears in The Scotsman newspaper.
