Global telecoms group Cable and Wireless (C&W) will press ahead with its planned £760m acquisition of web hosting company Exodus Communications, despite unease among many of its shareholders.
The deal is expected to be finalised on Wednesday as no other bidders have come forward, allowing a US court to endorse the deal agreed last November. But C&W institutional shareholders are concerned that the amount being paid by the company is too much.
California-based Exodus filed for Chapter 11 bankruptcy protection last Autumn with debts of over £2.4bn ($3.5bn), accumulated primarily from repayments on massive venture capital investments.
But it hosts and supports nearly one third of the 150 most popular websites worldwide, which provides a strong and steady revenue stream.
Unease among key investors follows recent deals under chief executive Graham Wallace that have turned sour.
When selling its cable television business to NTL, and Hong Telecom to Pacific Century Cyberworks, Wallace took shares in part payment. But both sets of shares collapsed costing C&W several billions of pounds.
Wallace does not need investor approval for the deal to go through as C&W remains cash-rich. It has been selective in choosing the Exodus assets, taking only 26 of the 44 operational web-hosting centres plus four more fully-fitted and ready to be used.
C&W expects to invest as much as £175m in order to bring the company to a break even point.
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