Cable & Wireless, the United Kingdom’s second-largest telecommunications carrier, said on Tuesday it has acquired its competitor, Energis, dodging an eleventh-hour shareholder appeal by rival bidder, THUS, to scrub the deal.

The complicated buyout deal is worth about $1.2 billion, well short of the $1.5 billion that a number of dissenting hedge funds were demanding. C&W set a deadline of 5 p.m. on Monday for 75 percent of Energis debt holders to sign off on the deal or it would take its bid off the table. It didn’t come to that.

“We are now adding scale to create a player capable of competing effectively with the incumbent in the U.K.,” said Francesco Caio, C&W’s chief executive. “The regulatory climate has changed in the last year and broadband is now out of the labs and is ready for more volume.”

The merger of two of the country’s largest carriers creates a clear No. 2 player in the U.K. market with a nationwide reach that can compete more effectively against BT Group, the largest carrier in the country.

Energis brings a cache of blue-chip customers including IBM, BBC, EDS, Virgin Group, RAC, and Royal & SunAlliance to the merged entity.

The lucrative customer base is a result of the company tightening its focus on the corporate market in 2002 when John Pluthero, its chief executive, and a new management team took the helm of the company.

New Aggressiveness

“This puts BT on notice that Cable & Wireless will be much more aggressive in the enterprise market. Cable & Wireless has a lot invested in broadband so it will be able to offer its business customers more cost-effective network solutions sooner,” said Bill Owens, a London-based vice president of Adventis.

“Cable & Wireless’ network upgrades are not as ambitious as BT’s but they can implement their network much more quickly,” he added.

BT is in the early stages of planning and building its state-of-the-art $19-billion 21st Century network (21CN), which has attracted worldwide attention and includes many of the world’s top-tier equipment companies among its suppliers.

C&W has embarked on a more modest construction of its new broadband network. The BT network is expected to take from five to seven years to complete, while C&W’s is expected to take between three and five years.

“This means that Cable & Wireless will be able to retain its customers and make a play for some of BT’s. I expect a lot of intensity over the next three years,” said Mr. Owens. “The enterprise market is firmly in play. That’s what the Cable & Wireless/Energis deal is all about.”