UK telco Cable & Wireless Worldwide (CWW) is in takeover talks with compatriot IT services group 2e2, according to reports. A transaction could see the company valued at £360m-£400m.
The deal is being billed in the media as one based on 2e2’s presence…
UK telco Cable & Wireless Worldwide (CWW) is in takeover talks with compatriot IT services group 2e2, according to reports. A transaction could see the company valued at £360m-£400m.
The deal is being billed in the media as one based on 2e2’s presence in the cloud, a stated area of interest for CWW.
Speaking at the TelecomFinance 2011 Conference in January, Matt Key, managing director of the enterprise division at Cable & Wireless Worldwide, focused on the company’s cloud offering, saying that the new business area could represent “the beginning of the death of the classic telco”.
Private equity firm Duke Street acquired the company in 2006 for £130m, in a secondary buyout from Gresham Private Equity. Hutton Collins made a £85m preferred equity investment in the group in June 2010.
2e2 acquired Compel plc for £53m in 2007 and Morse in 2010.
According to its website, 2e2’s banks are RBC, Lloyds, HSBC and Barclays; turnover is now £430m, and staff numbers 2,500. According to Duke Street, revenue is £202m.
CWW, on its own website, promises that its cloud offering will fulfil customers’ IT needs “cost-effectively, with easy access and control, reliable availability and reassuring security”.
Indeed, many believe that operators able to carve out a space for themselves in the cloud will be able to compete with tech-focused IT services companies and systems integrators, as well as more fashionable rivals such Apple and Google.
CWW, which recently issued a profit warning due to decreased government spending, has a reported free cash flow of £61m.
The company itself has been a perennial rumoured takeover target for the likes of AT&T, Verizon, SingTel, Vodafone and O2.
Advising on CWW’s demerger from Cable & Wireless Communication in 2009 were Rothschild and Gleacher Shacklock as joint sponsors and financial advisers, with Allen & Overy acting as legal adviser.
Barclays Capital, BNP Paribas, JPMorgan, Lloyds TSB and RBS participated as financial advisers.
2e2, Duke Street and CWW did not return calls for comment.
