C&W, NTT enter 2nd round of takeover war

C&W, NTT enter 2nd round of takeover war

TOKYO (Reuters): Britain's Cable and Wireless Plc went on the offensive on Tuesday in a bidding war for diminutive Japanese telephone company International Digital Corp (IDC), topping up its price a day after NTT had upped its bid.

C&W, Britain's second-biggest phone carrier, said it had raised its offer for IDC shares to 110,577 yen (US$914) per share from 107,372 yen last month. C&W's new offer values IDC, a struggling international carrier in which C&W is a major stake holder, at 69 billion yen.

C&W, eager to tap the Japan's lucrative telecom market -- the world's second-largest -- also said it would extend the closing date for the offer by 10 days to June 15.

The counter offer came only a day after Japan's dominant carrier and rival suitor Nippon Telegraph and Telephone Corp raised its bid to 108,974 yen a share, valuing the company at 68 billion yen. Its previous offer valued the company at 66 billion yen.

The escalating takeover battle and an increasingly murky picture sent most IDC shareholders to the sidelines.

"The situation is so fluid that we cannot decide at this time whether to accept a new offer from C&W," a Toyota Motor Corp spokesman said.

Toyota, along with trading company Itochu Corp and C&W, is a major shareholder of IDC, each owning a 17.7 percent stake. Among IDC's some 140 shareholders are foreign stakeholders such as Merrill Lynch and AirTouch Communications Inc of the United States.

C&W launched the cross-border takeover battle, unprecedented in Japan, last month, but none of the shareholders have so far indicated they will accept the British company's previous bid, although some firms have expressed interest, industry sources said.

NTT has now made clear to IDC's shareholders that it would consider a cash offer and other options for IDC shareholders if its current share swap offer is not accepted.

The latest NTT proposal could deal a major blow to C&W, which had stressed that its all-cash proposal offered an advantage over NTT's share swap offer.

But NTT has not given shareholders other details, including the timing of a switch to a cash offer, the sources said. NTT has not publicly disclosed details of its offer for IDC.

The series of small incremental rises in the offers, particularly of deep-pocketed NTT, puzzles analysts. "NTT may not be particularly serious about buying IDC," says Nikko Salomon Smith Barney analyst Makio Inui. "It is working on behalf of IDC, which hopes to be absorbed by NTT."

Although both suitors have pledged full employment of IDC's 700 workers after acquisition, industry sources say job cuts are a concern if IDC is taken over by the British company.

Inui said the price tag so far put on IDC already exceeds its fair value.

Some analysts have calculated fair value for IDC around 40 billion yen, though they say this could vary depending on the acquirer's strategy for the company. Its current market capitalization is 31.2 billion yen. IDC, mired in harsh competition to lower rates, sees nil profit for the current business year.

NTT and IDC have maintained close ties since NTT helped found it in 1986 and there has been speculation that NTT would absorb IDC in July as part of a restructuring of its business to jump straight into the international service market it now lacks.