India's Tata Communications Ltd. Thursday became the second company after Vodafone Group PLC to formally express an interest in buying Cable & Wireless Worldwide PLC, saying it is evaluating a possible cash offer for the British fiber optic network operator.
But the considerations are at a "very preliminary stage," Tata Communications said in a filing with the U.K.'s Takeover Panel.
Cable & Wireless Worldwide noted Tata's interest, but didn't offer comment on the possibility of a deal, which could total more than $1.4 billion at the target's current market capitalization.
The Tata move is yet another signal of the increasing appetite of Indian companies--once satisfied with stable markets at home--for global assets as they look to establish and consolidate their presence around the world.
For instance, telecom giant Bharti Airtel Ltd. paid around $9 billion in 2010 to acquire the African assets of Kuwait's Mobile Telecommunications Co., while Mahindra & Mahindra Ltd. bought a 70.03% stake in South Korea's Ssangyong Motor Co. for KRW522.5 billion ($468 million at current rates).
The Tata Group itself has been at the head of India's acquisition pack.
The salt-to-software company has spent about $17.37 billion on foreign acquisitions since 2001, with GBP9.57 billion spent in the U.K. alone, data on the Tata website showed.
Its notable British purchases include the Tetley Group for $432 million in 2000, U.K.-headquartered Corus Group in 2007 for $12.2 billion, and Jaguar Land Rover PLC for $2.3 billion in 2008.
But analysts flag these buys while expressing apprehension over the ability of Tata Communications to manage such a large transaction, given its leveraged balance sheet.
They, however, agree that access to Cable & Wireless Worldwide's enterprise customers in Europe and around the world could help the Indian company offset off losses at its main voice business.
If the Cable & Wireless Worldwide purchase goes through, it will help the Tata Group company consolidate its position as a provider of undersea fiber optic connectivity and enterprise communications across the world.
There are likely to be benefits from economies of scale as well.
C&W Worldwide, the U.K. arm of Cable & Wireless PLC, was spun off from its parent in 2010. It owns
...Source: http://www.totaltele.com/view.aspx?ID=471743
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