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March 26, 1996

BT AND C&W TIGHT-LIPPED ABOUT MERGER TALKS

By CBR Staff Writer

British Telecommunications Plc is back in merger talks with Cable & Wireless Plc, the Mail on Sunday reckons, but neither side is saying anything about the purported talks. Any deal seems likely to involve a share exchange takeover of British Telecom by Cable & Wireless, with the latter also paying its holders a special dividend, and that would eliminate the need to renegotiate the latter’s agreements around the world and obviate the requirement for British Telecom to make a bid for the minority in Hong Kong Telecommunications Ltd. The German issue remains a serious one – British Telecom’s alliance with Viag AG is signed, sealed and delivered, and Veba AG owns 10% of Cable & Wireless. Many of the would-be German players have been coming together in alliances, but it seems a bit too much to ask Viag and Veba to do the same. It is suggested that AT&T Corp would buy Mercury Communications Ltd, paying a lot less than Cable & Wireless had wanted. Chairman Sir Iain Vallance and chief executive Sir Peter Bonfield would head the merged company, the paper said, suggesting that the quick resumption of talks was triggered by the UK Office of Telecommunications’ tough new proposals forcing Telecom to look abroad for growth.

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