Vodafone Group and fellow Cable & Wireless Worldwide suitor Tata Communications want to extend the deadline to make their bids for the telecoms company beyond the current date of 29 March, reports City AM.
The request is understood to have been made due to CWW senior management failing to provide the potential bidding companies with sufficient information about its operations. Vodafone and Tata need the information to be fully informed before making a decision on whether to make formal bids.
Vodafone was initially given a 12 March deadline for making a bid, which CWW extended to 29 March, the same deadline as Tata Communications.
Tata first expressed interest in CWW in March and appears to be well prepared to make a bid, having reportedly raised a loan of US$2 billion and drafted in Morgan Stanley to help work on the deal.
However, Vodafone’s board is believed to be split in opinion over whether to pursue the acquisition, according to City AM sources. The newspaper reports that some directors are hesitant due to concerns that buying a company that has more than £5 billion of UK tax losses could have consequences on Vodafone’s reputation.
The debt could be used by Vodafone to offset the acquisition cost, or be used to create a a "tax holiday" for Vodafone. Despite this being a legal thing to do, some board members feel this would be detrimental to Vodafone’s brand.
Vodafone boss Vittorio Colao is believed to be in favour of the deal in general for commercial reasons, but deputy chairman Sir John Buchanan is less keen due to the reputational concerns, the report said.
CWW was spun off from Cable & Wireless Group in March 2010 and has since issued three profit warnings. However the company’s UK fixed-line network is likely to be its appeal for Vodafone while Tata will be interested in CWW’s 425,000 km of undersea cable. CWW also has a client list that includes 70 FTSE100 businesses