Takeover27 Oct 2021 09:43
BT Group Boosts its UK Defences Against Possible Takeover
Wednesday, October 27th, 2021 (7:52am)
Broadband giant BT has reportedly hired advisory firm Robey Warshaw LLP to work alongside Goldman Sachs, which was appointed for a similar reason last year to help boost their defences against a possible takeover attempt by Patrick Drahi’s Altice UK, which in June 2021 acquired a 12.1% equity stake worth c.£2bn.
The 10th December 2021 is fast becoming an important date in the calendar because it marks the day when Altice UK will no longer be bound by a commitment it made not to launch a takeover bid for BT. “Altice UK has informed the BT Board that it does not intend to make a takeover offer for BT,” said the company in June 2021. But few ever took that seriously, not least because such statements are only considered binding for 6-months.
NOTE: Back when BT and EE merged the company’s shares were worth 441p, but today they’re 138p – making the operator worth c.£13.5bn.
A couple of months ago the German telecoms giant, Deutsche Telekom (DT), which has long been linked with speculation of a takeover attempt and also holds a similar 12% stake in BT, added further fuel to the fire of speculation by alluding to the possibility of a deal between DT, Altice UK and others for BT.
At the time DT’s boss, Tim Hoettges, said: “In the next 12 months something is going to happen there around [our 12% stake in BT] … We are entertaining all options. We have a lot of optionalities now on the table in the BT business. We will do something which is a good deal.” But any takeover would need to reflect a friendly approach in order to avoid a negative response from the UK Government, which is minded to protect key players in the British technology sector and will be weary of such a big deal.
According to Sky News, BT has now hired the same advisory firm that employs the former UK chancellor (George Osborne), Robey Warshaw LLP, to strengthen its defence against a potential takeover. Sources told Sky that BT’s board are sensibly planning for different scenarios, such as a formal takeover offer or a demand for BT to spin off its consumer division (i.e. BT, Plusnet and EE) or network access division, Openreach.
In the past, potential suitors have often ended up being discouraged by various concerns over the operator’s complex regulatory position, uncertainties around the outcome of Brexit, challenges due to massive debt (£18.6bn) and pension (£50bn) liabilities, as well as various other issues.
However, the market and BT have gone through a number of key changes over the past 1-2 years. For example, the new UK and EU trade deal has helped to make the post-Brexit future easier to predict. Openreach have also gained some longer-term regulatory certainty from Ofcom, which has enabled them to dramatically expand their £15bn rollout plans for Fibre-to-the-Premises (FTTP) broadband technology – aiming to cover 25 million UK premises by December 2026.
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