Vodafone Goes Public With CWW Offer

Vodafone (NAS: VOD) has finally gone public with a 38 pence per share offer to buy Cable and Wireless Worldwide.

The offer values the enterprise communications company at 1.044 billion pounds (about $1.6 billion) -- an 18% premium on Friday's closing price of 32 pence per share, and around 100% more than the company was worth prior to the start of the bid process on Feb. 10.

Done deal?
The offer has been unanimously accepted by CWW's directors and already has the backing of both companies' financiers and 18.58% of CWW's shareholders. CWW Chairman John Barton made his intentions clear when he described the offer as "an exciting opportunity ... to benefit from the many advantages that will come from being part of the Vodafone Group."

Although former bidderTata retained the right to make a counteroffer to any future bid, this seems unlikely as press reports suggest that it was having trouble raising the finance for a competitive offer and was previously offering less than 25 pence per share.

Voda benefits?
As a Vodafone shareholder, I think this deal represents excellent value and should help fuel further earnings growth for the world's largest mobile operator. Here's why:

1. Cheap U.K. data network
One of the main attractions for Vodafone is CWW's large U.K. fiber network. Vodafone, like other mobile operators, is struggling with data capacity as a result of the explosion in internet traffic from its customers' smartphones.

The cost of building out a U.K. fiber network from scratch is extremely high, certainly far higher than the 1 billion pound price tag attached to CWW.

2. Enterprise growth
Vodafone is thought to be keen to grow its corporate business to compensate for slowing growth in the consumer mobile market. CWW has an attractive portfolio of enterprise customers, including Tesco (NAS: TESO) and various public sector organizations.

CWW's fixed-line network will also mean that Vodafone can offer integrated (landline, mobile, and data) services to corporate customers -- the appeal of which seems to be confirmed in Vodafone CEO Vittorio Colao's statement today: "The acquisition of Cable & Wireless Worldwide creates a leading integrated player in the enterprise segment of the UK communications market and brings attractive cost savings to our UK and international operations."

3. Undersea assets
The other main arm of CWW's business is its undersea cable network. Reports suggest that Vodafone will sell this off, which will recoup some of the costs of the deal.

4. Cost neutral?
According to a recent research note from Bank of America Merrill Lynch analysts, "Vodafone could benefit from a combination of revenue synergies, cost synergies and tax assets which together could be worth 1 billion pounds."

Voda remains a buy
All of this simply reinforces my opinion that Vodafone makes an excellent long-term buy for investors -- a decision made even simpler by Vodafone's tasty 5.9% dividend yield.

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At the time thisarticle was published Roland owns shares in Vodafone and Tesco.Motley Fool newsletter serviceshave recommended buying shares of Vodafone Group. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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