White knights seek to rescue Thus from £302m bid

Two telecoms carriers have approached Thus with white knight proposals as it tries to fight off an unwanted £302m bid by Cable & Wireless (C&W).

Global Crossing and Colt Telecom are believed to have been in contact with Thus's investment banking adviser Greenhill in the past two weeks.

The telecommunications company is under intense pressure to produce an alternative bidder as it steadfastly refuses to hold talks with C&W, which approached it on May 28 with a cash offer of 165p a share.

Although several companies have expressed interest in a tie-up with Thus, at this stage it has received no formal offers.The board, led by chairman Philip Rogerson, will urgently review its options this week in the hope it can flush out a deal.

Management, led by chief executive John Pluthero and Richard Lapthorne, the chairman, have been frustrated at Thus's reluctance to enter talks.

C&W is this weekend considering raising its offer for the company in the hope of finally bringing Thus to the table.

The smaller company, whose chief executive, Bill Allan, spent 26 years working for C&W, insists that its largest investors are behind it, even though C&W's offer was at a 50% premium to its share price the day before the approach was made.

US funds Amber Capital and Columbia Ventures own 19% of the company between them. Another large shareholder, Investec, broke its silence to claim that the company was worth more than 200p a share.

One investor said Allan would have to present firm, alternative proposals to persuade them it was right not to talk to C&W.

"The bird has to be firmly in the hand with the fist clenched," he said. "Anything short of that, and if they have not engaged with C&W, they will be breaching their fiduciary duty to shareholders." He added he could be won over by a sweetened C&W deal that "doesn't have a two in front of it but is clearly above where it is now".

Many analysts are doubtful that Thus can find an alternative that values it at more than 165p in cash. Its shares closed last week at 153p.

The company is a useful bolt-on deal for C&W, which is trying to bulk up UK revenues so it can demerge its overseas division later this year.

Glasgow-based Thus, formerly Scottish Telecom, has made slow, steady progress since it was spun out of Scottish Power almost a decade ago.

It is barely profitable, but holds a number of attractive contracts with blue chips such as HSBC and Royal Bank of Scotland.

Global Crossing has recently sounded out a number of carriers about buying or combining with its European arm, the bulk of which is the old Racal Telecom. It had underlying earnings of £79m last year. Colt Telecom, meanwhile, is controlled by fund manager Fidelity.

source: timesonline.co.uk 22-06-2008

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