Cable & Wireless claims it will be able to reduce its reliance on BT’s infrastructure after sealing its acquisition of rival telco Energis yesterday.

The company will pay £594m in upfront cash for Energis, with up to £80m more in cash or shares three years after the deal is completed. C&W will also inject £35m into the Energis business, to cover short-term working capital requirements, which it expects to recover within a year.

Energis boss John Pluthero will head the combined UK business, and he will also join the C&W board. At the other end of the personnel scale, the combined firm will cut 700 jobs group by March, 2008.

C&W’s bid, announced on Friday, had a deadline of 5.00pm on Monday. Some Energis shareholders had been holding out for more, while Thus Plc revealed early yesterday that it too was interested in buying the company.

However, C&W clearly convinced the 75 per cent of Energis shareholders it needed by the time the deadline came round.

C&W seemed at pains to reassure the world that it was not wearing rose-coloured spectacles when it decided to take on Energis.

“We are realistic about the short-term prospects of the combined business. The transaction will not alter the fundamental trends affecting legacy services of continued pricing pressure and a high level of competition,” it said.

But, it said, “additional scale will allow us to further reduce unit costs to mitigate this pricing pressure… and, in the mid-term it will drive better returns on our strategic investment.”

C&W said the deal will allow it to reposition itself as “the alternative to the UK incumbent”. In a customer FAQ it claimed that customers want a competitor that can consistently compete toe to toe with BT, and the combined company will do this. At the same time, it said, it will have a “less BT-reliant infrastructure.”®

Related stories

• Cheeky BT tries to poach 'displaced' C&W punters (9 March 2006)
• C&W backs Bulldog in restructuring (28 February 2006)
• C&W absorbs Energis (11 November 2005)
• Kingston Comms confirms bid approach (10 November 2005)
• C&W/Energis merger to be finalised shortly (8 November 2005)
• OFT OKs C&W's Energis buy (25 October 2005)
• OFT probe could scupper C&W/Energis deal (17 October 2005)
• C&W hammered as UK revenues fall (7 October 2005)
• Thus looks to spend and grow (30 September 2005)
• Energis rubbishes Thus bid (15 August 2005)
• Thus throws hat into Energis ring (15 August 2005)
• Deadline set for C&W's Energis take-over (12 August 2005)
• C&W sniffing around Energis - confirmed (25 July 2005)