Cable & Wireless has set itself a deadline of the end of the month to tempt Thus to the negotiating table.

The Glasgow telecoms group yesterday rejected an initial 165p-per-share offer from C&W saying that it undervalued it. C&W said that it would either make a firm offer, or withdraw, by 5pm on June 30.

The group said that it is disappointed that Thus had snubbed the proposal but wanted to avoid an extended process of trying to persuade the company to enter discussions.

The offer represented a 50 per cent premium to the Thus share price on the day before its approach and valued the company at about £302 million. At the time, traders had estimated the bid was about 150p a share.

In a statement yesterday, Thus said that the approach failed to estimate the standalone value of the business. It valued its net assets at £461 million, or 252p per share, which it claimed reflects the investment made to date in its next-generation network.

C&W made its initial approach on May 28. At the time Thus said that it was “confident in its future as an independent group” and urged shareholders not to act.

C&W said yesterday that it considers that “its proposal represents a full and fair offer which unlocks value for Thus shareholders which would not be available to them on a standalone basis. Cable & Wireless hopes that the board of Thus will reconsider its refusal to discuss the proposal.”

C&W said that the combination of the two companies would create an enlarged group with “greater scale, product and service capability and financial strength”, adding scale was critical in telecoms these days to sustain the investment required to attract higher-margin revenues. It also said that the acquisition would allow it to develop further the value of its Europe, Asia & US business and accelerate growth plans.

Analysts have said the approach heralded the start of long-anticipated consolidation in UK telecoms.

The bid also reignited long-standing rivalry between Bill Allan, the chief executive of Thus, and John Pluthero, the executive chairman of C&W.

Mr Allan, 53, an industry veteran, spent most of his career with C&W and ran its international businesses before joining Thus in 1999. When C&W weeded out smaller customers, Mr Allan snapped them up. The pair crossed paths three years ago when C&W made an offer for Energis, then run by John Pluthero. In a last-minute move that surprised the market, Thus entered the ring with an £800 million cash and shares offer. However, Energis’s owners snubbed Thus and opted for the lower deal from C&W.

Shares in Thus rose 2 per cent on the announcement to 159.25p. They closed at 158p, giving the company a market value of £289.19 million. Cable & Wireless shares closed down 4p, or 2.38 per cent, at 164p.

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