Shares in Cable & Wireless Worldwide (LON:CW.) leapt by 28% as mobile phone giant Vodafone (LON:VOD) confirmed it is considering a bid.
In a statement, Vodafone said it regularly reviews opportunities in the sector and is in the very early stages of evaluating the merits of a potential offer for CWW.
Reports over the weekend had suggested Vodafone could launch a £700 million cash bid for Cable & Wireless Worldwide, which has seen its share price slump by almost three-quarters since its split from the rest of Cable & Wireless in 2010.
The group has issued three profit warnings over the past twelve months, while its latest trading update this week will be presented by its third chief executive since June.
Current chief Gavin Darby is ex-Vodafone and ran the group’s UK division as well as its businesses in China and Africa before moving to CWW in November.
Vodafone said there was no certainty it would make an offer in its statement, but analysts said CWW’s high speed telephone infrastructure and customer base of blue-chip companies and governments would be a tempting target.
It also has the firepower with the group last week reiterating it expects to generate free cash flow this year of over £6 billion with another £2.8 billion to come from a dividend from US associate Verizon Wireless.
Vodafone may not have the field to itself with other groups with rival mobile phone group 02 and private equity group Apax also said to be taking an interest.
Shares in CWW rose 5.45p to 25.2p.