CandW remains firm favourite for Thus

Colt Telecom and Global Crossing considered unlikely contenders to rescue Thus from the advances of Cable and Wireless.

Cable and Wireless looks likely to have a clear run at smaller rival Thus as the City concluded there was little real hope of "white knight" counter bids from competitors.

Shares in Thus had been tipped to soar this morning after newspaper reports at the weekend suggested Colt Telecom and US-based Global Crossing had approached the embattled telecoms company to discuss a counter offer as it seeks to stave off the unwanted advances of Cable and Wireless.

However, the Glasgow-based company added just 2.75p to its share price, bringing it up to 156p as the market closed - still almost 10p off CandW's indicative offer.

At the end of last month, CandW made an unsolicited 165p-per-share bid for its rival. Thus rejected the bid, saying the offer undervalued it.

According to industry sources, Thus has since been attempting to drum up counter bids, but has so far failed to mobilise any formal offers.

CandW has set a self-imposed deadline to either make a firm offer, or withdraw, by 5pm next Monday, June 30.

Thus therefore has one week to convince its shareholders it was right to turn down an offer that at the time represented a 50 per cent premium to the company's share price.

Industry analysts believe it is unlikely Colt or the UK arm of US-based Global Crossing will challenge CandW. Sources close to the negotiations said Colt would probably not bring a bid to the table.

Jonathan Groocock, telecoms analyst at Investec, said the "white knight" rumours "may simply be tactics encouraging a higher bid before the June 30 deadline."

In a note to clients he wrote: "We can see fewer synergies available to Colt [than CandW] and would be surprised to see it bid given its lack of MandA activity in recent years."

He added recent speculation that Global Crossing UK could be up for sale did not tally with it bidding, concluding CandW was the "prime candidate" for acquiring Thus.

Estimating a deal would bring £30 million to £50 million of synergies, Mr Groocock said CandW could justifiably raise its offer to 180p to 200p-per-share.

He said: "Some major shareholders of Thus are keen for a deal to be done, and 180p-200p represents a 65 per cent to 80 per cent premium to the pre-deal share price."

Colt closed up 2p, or 3 per cent, at 153p.

source: timeonline.co.uk 23-06-2008

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