US private equity giant KKR eyes bid for stricken BT

Private equity barons at KKR are sniffing around BT.

The US giant is said to be monitoring developments at the troubled telecoms company, which has seen its share price almost half this year, and is now valued at just £10.4billion.

The slump in shares at BT has put it on the radar of a number of suitors looking to snap up bargains in the Covid-19 pandemic. 

BT chairman Jan du Plessis and chief executive Philip Jansen (pictured) had already hired advisers at Goldman Sachs to draw up a defence strategy, but this has not dampened interest

BT chairman Jan du Plessis and chief executive Philip Jansen (pictured) had already hired advisers at Goldman Sachs to draw up a defence strategy, but this has not dampened interest

BT chairman Jan du Plessis and chief executive Philip Jansen (pictured) had already hired advisers at Goldman Sachs to draw up a defence strategy, but this has not dampened interest

Interest from KKR, one of America’s oldest private equity firms known for its shrewdness and ruthless cost-cutting abilities, will cause alarm in the BT boardroom, the City and Westminster.

While BT shares are languishing around decade lows, the company is the middle of a major upgrade of Britain’s broadband network, a critical part of national infrastructure.

BT chairman Jan du Plessis and chief executive Philip Jansen had already hired advisers at Goldman Sachs to draw up a defence strategy. But this has not dampened interest from potential bidders, with KKR among those looking at the firm, according to the Financial Times.

Despite its poor financial performance, analysts believe BT could be valuable in the right hands. 

Openreach, the division of BT which owns and manages its broadband network, is thought to be worth around £20billion alone – double the value of its parent on the stock market. 

This raises the prospect that any buyer, including KKR, could break up BT and sell its parts.

There would be obstacles for any potential buyer of BT – not least the company’s huge pension scheme deficit, as owners could face demands to plug the estimated £9billion gap.

Other potential buyers are thought to include BT shareholder Deutsche Telekom, while Saudi Arabia’s sovereign wealth fund has been building a stake in BT this year.

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