Cable & Wireless Plc has made an offer for the whole of the share capital of customer telecommunications equipment supplier Telephone Rentals Plc in a cash deal that values the company at UKP283.8m – a sum dismissed by Telephone Rentals as wholly inadequate. The all-cash offer of 305 pence a share represents a premium of 44% over Telephone Rentals’ share price at the close of dealing on Monday; a multiple of 21.7 times historic earnings per share; and a premium of 196% over net assets. The board of Cable & Wireless is seeking a recommendation for the offer and anticipates a significant increase in Telephone Rentals’ earnings per share over last year which, at 14.1p, were lower than in 1984. Telephone Rentals, which is expected to remain under separate management within the group if the bid succeeds, maintains approximately 50,000 communications systems for companies in the UK and has over 800 engineers based at 26 centres throughout the country. It supplies PABXs, internal telephone systems, data communications equipment, time control equipment, fire-alarms, broadcasting systems, dealer board systems, and portable telephones – and was in process of buying Carphone Group when Cables struck – see front. Though the majority of business is in the UK there are subsidiaries in France, Ireland, South Africa, North America, and an associated company in Australia. Pre-tax profit in the year ending December 31 was UKP19.6m on turnover of UKP106.3m. A spokesman for Cable & Wireless said the two companies are a natural fit as Telephone Rentals is the UK’s second largest customer telecommunications supplier, while Cable & Wireless’ subsidiary, Mercury Communications, is the only company licensed to compete with British Telecom in the provision of a telecommunications trunk network in the UK. In the year to March 31 1988 Cables made pre tax profit of UKP356.1m on UKP932.4m turnover.
