January 14, 2004 — (WEB HOST INDUSTRY REVIEW) — The deal to sell Cable & Wireless USA to Gores Technolgy Group is in danger as several potential buyers appear to be interested in purchasing the US Web hosting and IP solutions arm of C&W, according to several sources quoted in a report published yesterday by Reuters.
Cable & Wireless USA, the US Web hosting division of the UK telecommunications carrier, agreed in early December to sell its assets to Gores Technology Group, a private investment firm based in Los Angeles.
However, according to Reuters, the Gores bid was submitted as a “stalking horse” offer that requires US bankruptcy court approval. Such status means that other bidders can attempt to top the offer.
Sources quoted by Reuters said the list of interested buyers already includes Oaktree Capital Management, Cerberus Capital Management, WilTel Communications Group and Level 3 Communications.
The latest developments is good news for C&W as it potentially drives up the price it will receive for its US division.
A source close to the auction process told Reuters that “What Gores got was a super-low price for the assets and now others are challenging it. No one thought Gores would win at that price.”
Cable & Wireless has been attempting to sell its loss-making US division since announcing its intentions to exit the US marketlast June. The December announcement of an agreement to sell to Gores Technology followed several weeks of rumors concerning the company’s impending bankruptcy. Under the agreement reached with Gores, C&W would have to file for chapter 11 bankruptcy.
