Cable & Wireless acquires Energis

Cable & Wireless acquires Energis

Telecom giant Cable & Wireless has announced plans to acquire smaller rival Energis. The deal is going to be worth around 674 million pounds and it would help the company to battle industry price pressures and take on the leaders in the market British Telecom. C&W are the second largest players in the British market and they have claimed the cost saving from this deal would help it to cope with sliding prices of old technologies.

The companies have big plans to enter into the broadband market and these price savings would help Cable & Wireless to invest in huge numbers. They have however also decided to suspend its share buyback program. A market analyst said that the decision to buy Energis is a good one. On condition of anonymity, the analyst said: “It’s a sensible deal. But after a good run, maybe people are focusing on the integration risks.”

Cable & Wireless added that it was paying 594 million pounds in cash for the UK’s third-biggest fixed-line telecoms firm in addition to another 80 million pounds in cash or shares in the third year after completion. This price would depend on the share value of the company at that point. The deal is expected to be completed later this year. Market experts have since long expected to see a consolidation in the UK market with many small players making it hard for the big giants to invest in future technologies for the benefits of the end consumer.

C&W also said that buying Energis would boost its earnings in the first full year of ownership and in the later years.