24 Aug BT shares jump as it prepares defence against £15bn takeover approach | Business News
Shares in BT have jumped after Sky News revealed that the telecoms giant’s board was preparing to defend it against a potential £15bn takeover bid.
The stock climbed by as much as 8% in early trading on Monday after the story over the weekend from Sky’s City editor Mark Kleinman.
BT has in recent weeks asked bankers at Goldman Sachs to update its bid defence strategy against takeover approaches from industry rivals and buyout firms.
Advisers from City firm Robey Warshaw may also be asked to play a role, Sky News revealed.
The move comes after the suspension of BT’s dividend prompted its shares to slump to their lowest level in more than a decade.
Its market capitalisation had fallen to just £10.1bn at the end of last week.
Sources told Sky News at the weekend that BT had not yet received a formal approach from any potential suitor.
Any such approaches would attract close political scrutiny, with the group having committed to funding a £12bn investment programme to roll out superfast fibre broadband to 20 million premises across Britain by the end of the decade.
It also occupies a key role in constructing the 5G network which Chinese firm Huawei was banned from being involved with last month.
BT’s role in defence and critical national infrastructure networks means a deal would require government approval.
Any buyer would also be forced to make legally binding commitments about investment, jobs and future ownership.
Its shares have suffered in recent years amid troubles at its global services division and rising forecasts of the scale of investment required to roll out full-fibre broadband and modernise the company.
Last month, BT warned that the coronavirus pandemic would trigger sharp falls in revenues and profits for the full year, with the dearth of sport during the lockdown and reduced activity from business customers impairing its performance.
Sources said at the weekend that a number of large private equity firms had begun exploring the possibility of a joint bid for the group.
This year’s biggest domestic deal to date in the sector was the £31bn merger of Virgin Media, owned by Liberty Global, and O2, the mobile network owned by Telefonica.
In May, BT denied a Financial Times report that it was in talks with the Australian bank Macquarie about the sale of a stake in Openreach.
Shares in the company have slumped to less than a quarter of the 441p they traded at on the day its deal to buy the EE mobile network was agreed in 2015.
On Monday, the stock climbed to more than 110p in early trading, though later pared back some of the gains.
BT, which competes with Sky News’ immediate parent company in the provision of telecoms, broadband, mobile and pay-television services, was privatised in 1984.