Shares in telecoms giant BT Group jumped today on takeover speculation.
It was reported yesterday that the firm is preparing to defend itself against a hostile bid.
Shares in BT are up 6 per cent to 107.8p in Monday morning trading.
Slump: Britain’s biggest telecoms group is at risk of being taken over because its value has slumped to just above £10billion
Britain’s biggest telecoms group is at risk of being taken over because its value has slumped to just above £10billion – the lowest since the depths of the financial crisis.
Bosses have hired Goldman Sachs to update its defence strategy against rivals or private equity, Sky News reported.
A move by a rival to take over the business, which is in charge of the £12billion drive to roll out superfast fibre broadband to 20m homes and will play a key role in building the UK’s 5G network, would require Government approval.
The belief that BT’s shares are under-valued is a boost to its private shareholders.
Analysts see Deutsche Telekom, which holds a 12 per cent stake, as a possible suitor, although it is understood that BT has not received any formal approaches. BT did not respond to a request for comment.
Helal Miah, investment research analyst at The Share Centre commented: According to weekend media speculation, BT is stepping up its defences against a takeover since the weakness in the share price brings forward the threat of potential bidders.
‘No bidders have been identified but any potential bidder may be attracted by the fact that individual businesses such as Openreach are valued far higher than the sum of the parts of £10bn with potential bidders coming from the private equity industry. Deutsche Telekom is seen as a likely candidate given its 12% stake in BT following the deal several years ago for EE mobile network.’
‘This speculation in some ways justifies current investor’s belief that the company is undervalued but its current organisational structure suggests the share price will not appreciate to fair valuation anytime soon,’ Miah continued.’The view among some is that if BT is to become a private company it may be easier to restructure and unlock value than as listed business.
‘This does not help long suffering retail investors much, but this speculation may help in establishing a floor to BT’s share price and may give more impetus for management, and even the government/regulators in helping BT achieve that restructuring that is much needed.’