Glasgow-based telco Thus Group has put in a bid for Energis just hours before a rival bid by much larger competitor Cable & Wireless is due to expire.
Thus submitted the £800 million offer to the board of Chelys, Energis' parent company, on 27 July, shortly after Cable & Wireless went public with its bid. On 1 August, Thus received a letter from the Chelys board indicating the company "was in a period of exclusivity with another party", Thus said in a statement.
Thus is now revealing its bid at a critical time for the Cable & Wireless proposal. Cable & Wireless has so far failed to get all of Energis' debt holders behind the offer, with hedge fund investors in one class of Energis' debt holding out for more. To break the stalemate, Cable & Wireless has said its offer will expire as of 5pm today if it hasn't been accepted by the holders of 75 percent of the value of Energis' debt.
Thus, on the other hand, is putting pressure on Chelys to refrain from making a decision. "The Thus board encourages Chelys stakeholders not to accept any proposal from any third party until the board of Chelys has initiated a process allowing Thus to present a definitive proposal to Chelys stakeholders," the company said in a statement.
The details of Cable & Wireless' bid haven't been made public, but it is believed to be worth about £710 million. Cable & Wireless told Techworld it would not comment on the situation, but its shares dropped as much as six pence in morning trading. Thus has suspended trading of its shares.
A merger of Cable & Wireless with Energis would unite two of the UK's biggest competitors to incumbent telco BT, both of which have struggled to compete separately since the dot-com bubble burst five years ago. Energis would make Cable & Wireless less reliant on selling wholesale network services and would give it access to more lucrative Energis corporate customers such as Tesco and IBM.
Thus, on the other hand, is profitable but much smaller - Cable & Wireless has a cash reserve of about £1.3 billion. Thus has a more modern network than Energis, meaning the larger company could cut capital expenditure costs on upgrading its network, as well as on ongoing operational capital spending, Thus said.
Thus said it would fund the deal through debt and an equity issue to existing shareholders, and has already lined up a financial institution to support the debt.