C&W acquires Energis for £594m

Cable and Wireless (C&W) has announced the acquisition of business communications company Energis for an initial £594 million.

However, the combined business is expected to realise savings of £55 million in 2006 to 2007 rising to £80 million in 2007 to 2008, and C&W will cut around 700 jobs by the end of 2008.

Announcing the agreement today, Cable & Wireless Group CEO, Francesco Caio, said: “The acquisition of Energis is a further step in the development of Cable & Wireless in the UK and will accelerate the strategic transformation that we have undertaken in the last 15 months. The integration of the two businesses will deliver good cost and capex synergies and add blue chip customers to our existing base in the large corporate segment."

The acquisition will make C&W the second largest player in the telecoms market after British Telecom. C&W, depending on share performance, will make a further £80 million payment on the deal in 2008 to parent company Chelys.

C&W expects to exploit the rapid growth in demand for IP-based services and the opportunities presented by the creation of a regulatory framework designed to facilitate infrastructure-based competition in the sector.

Energis is currently the third largest fixed line telecoms operator in the UK and focuses on business voice, telephony, and data services.

On completion of the deal, Energis Chief Executive John Pluthero will be appointed Executive Director UK Business and will join the Board of Cable & Wireless. He will be responsible for the combined UK operations of Cable & Wireless and Energis, excluding Bulldog Communications.

Commenting on the deal Mr Pluthero said: “The fundamental changes in the UK telecoms market cannot be dealt with by yesterday's model. This combination delivers what customers require today - a company with more capability, greater access and larger scale. Those are the prerequisites to compete in the UK market and that is the business we are setting out to create today."

A last minute offer from Thus of £800 million was rejected by Chelys in preference to the deal from C&W.

The purchase of Energis by C&W remains subject to approval by the Office of Fair Trading.

(SP/KMcA)