PCCW and Texas Pacific to make fresh £2.4bn approach to Cable & Wireless

PCCW of Hong Kong is set to table a new bid for Cable & Wireless this week, which could value the troubled telecoms group at up to £2.4bn.

The Hong Kong-based telecoms and internet company, which has teamed up with the US buyout specialists Texas Pacific, will write to Richard Lapthorne, C&W's chairman, requesting a meeting to discuss the possible sale of the business.

An offer, which would come just over a fortnight after Mr Lapthorne rejected an informal approach from PCCW, is expected to be pitched at about 100p a share – a 35 per cent premium to C&W's current price.

C&W is expected to insist that any offer is unconditional and fully financed before it agrees to a meeting. But PCCW is likely to demand full access to C&W's financial records before it proceeds. It is thought, however, that the Hong Kong group may be prepared to drop an earlier demand that made talks contingent on C&W promising not to sell its stake in PCCW.

Next week's letter would be the first time Richard Li, PCCW's chairman and chief executive, has made contact with C&W since the end of December, when he first approached the troubled British company with a view to making a bid. By making an indicative offer, Mr Li would hope to convince Mr Lapthorne and C&W's shareholders that he is serious about a takeover. PCCW is being advised by Goldman Sachs. JP Morgan is among three banks providing the financing.

Any firm offer for C&W would allow Mr Lapthorne, who succeeded Sir Ralph Robins as chairman last month, to crystallise an immediate profit on 1 million shares that he bought on 10 January, the day of his appointment. Mr Lapthorne was granted an option to buy the shares at the closing share price of 57p each as part of his contract.

A C&W spokesman yesterday defended Mr Lapthorne's share purchase – made after PCCW's takeover approach promising an offer at "a substantial premium" – on the grounds that the new chairman was not informed of Mr Li's interest until his first board meeting on 14 January because the approach was not deemed serious enough. "Telecoms companies get approached all the time. This one was not judged to be any more serious than any other," the spokesman said.

PCCW and Texas Pacific would not make a hostile offer for C&W because they would need details of change of control clauses at some of the British company's regional businesses. A new owner would need regulatory clearance from each state in the Caribbean, posing the possibility that the units' spectrum licences could be taken away.

In the event of a successful bid, Texas Pacific would take over most of C&W's loss-making US operations while PCCW, which is keen to diversify away from Hong Kong, would control the company's cash-generative regional businesses. In addition to the Caribbean, these include interests in Bahrain, Panama and Macau. It is thought PCCW would also take control of C&W's UK arm, the former Mercury Communications.

Question marks still surround the future of C&W's £2.2bn net cash pile – and how much would be left if the company is unsuccessful in ring-fencing £1.5bn to cover a tax indemnity that emerged at the end of last year.

Mr Li, the son of Hutchison Whampoa boss Li Ka-Shing who is Asia's richest man, is no stranger to negotiating with the British telecoms group. In August 2000, he paid £10.4bn for C&W's 54 per cent stake in Hong Kong Telecom. The deal transformed his Pacific Century Cyberworks group, which was originally set up as an internet incubator, into a telecoms utility.