(Alliance News) - TalkTalk Telecom Group PLC said Thursday it has agreed to an GBP1.11 billion takeover offer by Tosca IOM Ltd, a new company formed by asset manager Toscafund Asset Management LLP and Penta Capital LLP.
Toscafund currently holds a 29% stake in the FTSE 250 telecommunications firm.
Under the acquisition's terms, Tosca IOM will acquire TalkTalk Telecom for 97 pence per share, reflecting a 0.8% premium to the group's closing price of 96.25p on Wednesday.
Shares in TalkTalk Telecom were up 2.7% at 98.89 pence on Thursday in London. The stock is down 15% so far in 2020.
The acquisition is conditional on gaining at least 75% in shareholder approval at both the scheme meeting and court meeting, as well as being sanctioned by the court.
TalkTalk Telecom expects the acquisition to be completed within the first quarter of 2021. So far, Tosca has obtained irrevocable acceptances from around 361.0 million shares, reflecting 31% of the company's entire issued share capital.
Explain the company's support for the takeover offer, Chair Charles Dunstone said: "My decision underlines my passion for the company and the confidence the senior management team and I have about our journey ahead. That said, as the UK transitions to full fibre we have a hugely challenging, but exciting opportunity. Being a private company would allow us to accelerate adoption and focus on our role as the affordable provider of fibre for businesses and consumers nationwide. The telecoms industry is going through a fundamental re-set and we are keen to play our part in it."
Also on Thursday, TalkTalk reported a weaker performance for the first half of its financial year, as despite a soaring usage in Data, the pandemic took its toll on the company's performance.
For the six months to the end of September, TalkTalk swung to a pretax loss of GBP3.0 million from a profit of GBP1.0 million the year before.
Headline earnings before interest, tax, depreciation and amortisation dropped by 13% to GBP122 million from GBP140 million, driven by a 6.6% year-on-year decline to GBP740 million from GBP792 million.
The revenue decline was driven by trading restrictions, the removal of call usage caps, average revenue per user dilution caused by early re-contracting and an increase in bad debt provisioning.
Due to TalkTalk's takeover offer by Tosca, the company declared no interim dividend. However, should the transaction not be completed, the board will make a decision on a payout.
Looking ahead, due to the continued uncertainty caused by Covid-19, TalkTalk has withdrawn its full-year Ebitda guidance. In July, the group guided for delivering Ebitda either in line with the year before or higher.
Finally, TalkTalk announced that it will appoint Phil Eayres as chief financial officer, with effect on March 31, or whenever the takeover become effective.
He will be replacing Kate Ferry, who is stepping down after three years in the role since 2017.
Eayres has been part of TalkTalk since 2014,his most recent role being as an independent strategic advisor, playing a role in TalkTalk's sale of its fibre network roll-out business FibreNation Ltd.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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