Cable & Wireless’ (C&W) decision earlier this week to offload GBP1 billion (USD1.76 billion) of pension liabilities to Prudential, the life assurer, has reignited discussion on the possible break-up of the company. According to the Financial Times, although it can not be ruled out that part or all of the group could be bought by a third party in the coming months, the most likely format for the expected break-up is a demerger that would take effect next year. C&W declined to comment on the story.
C&W currently has two operating divisions – a UK and an international arm – both led by John Pluthero – and investors would gain shares in both under a demerger. An important catalyst for a demerger is supposedly under way, because C&W has said its UK business should be cash flow positive in 2008/09. That would allow it to stand alone from the international operations, which have long been C&W’s cash cow.