Cable & Wireless has made an opportunistic grab for its smaller Glasgow-based rival Thus, a move that will reignite the bitter rivalry between one of the telecoms industry's longest-serving executives and one of its most maverick figures.
C&W's chairman, Richard Lapthorne, approached Bill Allan, chief executive of Thus, this week with an offer that traders believe was pitched at about 150p a share. Such an offer would value Thus at about £275m - a fraction of the £4.5bn the company was valued at during the heady days of the dotcom boom, when it briefly made an appearance in the FTSE-100 index.
C&W confirmed yesterday that it had made "a preliminary approach" to Thus after the firm's share price started to rise.
In response, the Scottish company said that it remained "confident" in its ability to succeed on its own but admitted: "The board remains focused on delivering maximum value for shareholders and will evaluate any proposal from any third party against the value that the company can deliver as an independent group."
Traders hope C&W's decision to go public with its tentative approach will flush out other bidders, with AT&T suggested as potentially interested. There have been persistent rumours that the American company wants to get back into the UK telecoms market, having retrenched after the dotcom crash.
However, analysts believe C&W is the only viable bidder for Thus, which has been seen as a takeover target ever since it floated nine years ago, and say that the Scottish company's board will struggle to retain independence. It has suffered a series of profit warnings over the years and its share price has plunged so low the firm carried out a 10-for-one share consolidation.
Analysts at Investec branded Thus's recent annual results, which showed revenues up 8% to £576m and pre-tax losses reduced to £2.7m from £15m, as "unexciting". Thus has never made more cash than it spends and never paid a dividend.
C&W's advisers are hoping to bring the Thus team to the table for formal talks but any negotiations are likely to be heated as there is no love lost between the bosses of the two businesses.
Thus's chief executive is a telecoms veteran. The 53-year-old spent most of his career with C&W and ran its international businesses before joining Thus in 1999. He has since made no secret of his views on how he thinks C&W should be run.
When C&W made an offer for the bombed-out Energis in 2005, Thus made a dramatic last-ditch effort to snatch control of the business with an £800m cash and shares offer that took the market totally by surprise. Energis's owners - its creditors - rejected the approach and plumped for the lower deal from C&W.
At the time Energis was run by John Pluthero, who went on to take the top job at C&W as executive chairman. Seen by many in the industry as a maverick, the C&W boss has little time for Allan.
Thus, formerly Scottish Telecom, was floated on the stockmarket in November 1999 in a move that raised £1bn for its former parent, ScottishPower, and valued the business at £2.5bn.
It joined the FTSE-100 index the following year at the same time as Freeserve, the internet service provider run by Pluthero at the time.
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