Potential £15bn takeover bid sees BT’s share price soaring

Phillip Isakpa

• Rivals eye BT Group for £15bn ($19.6bn) takeover
• Firm asks Goldman Sachs for new defence strategy against potential takeover
• Firm sees nearly 9% rise in share price Monday after weekend reports

A potential £15 billion takeover bid for British Telecommunications (BT Group) led to about nine percent gain in the group’s share price on the London Stock Exchange on Monday, as per report by United Kingdom’s Invezz monitored by Business A.M. in Lagos.

According to Invezz, following weekend reports of the $19.6 billion (at current exchange rate) potential bids, the BT is reportedly now preparing a defence strategy should any such takeover contact be made to it.

Goldman Sachs on standby

It is also understood that investment banking giant, Goldman Sachs is on standby to help the group prepare a new defence strategy against such a bid by its rivals after BT Group’s share fell as a result of a dividends suspension.

The board of the group was said to have swung into action and asked the investment banker to help it work out any takeover bid of around the 151 pence per share.

But besides Goldman Sachs, it was also being reported that the London-based Robey Warshaw LLP, an adviser to Vodafone, is likely going to be involved as well. The bank is known to be a strong participant, in helping the UK develop its 5G network after it banned Huawei’s 5G equipment.

For the first time in 36 years, BT, once fully government-owned, decided to suspend yearly dividend payment this year and made itself vulnerable after it emerged that this had left its market capitalisation at just £10 billion, calculated to be 50 per cent of what its Openreach infrastructure assets are believed to be worth.

“One of the factors that sent its shares down is because BT Group suspended its dividend in the midst of the pandemic, with its market value dropping by 37.1% over the past year. Given that BT is heavily involved in defence and vital national infrastructure networks, any takeover bids for the company will have to obtain approval by the government,” Invezz further reported.

Prior to this development, a couple of statements had been made that tended to provide a snippet of outlook for the industry in the UK. It started with one government minister saying that he would present a bill in the autumn to remodel the UK’s approach to national security and foreign investors.

This was followed by a statement credited to Philip Jansen, BT’s chief executive officer, urging the Boris Johnson, the prime minister, not to rush expunging Huawei’s contribution in the countrywide 5G network. 

Potential takeover soars share

A nearly nine percent rise in its stock greeted BT Group in Monday trading after reports emerged of a potential takeover bid. According to Invezz analysis, a portion of gains have managed to get erased by sellers now that the stock is trading around 5.5% higher.

The analysis also noted that given the poor performance of the BT Group stock price this year, “there’s a huge upside for the stock should investors look to buy” the company’s stock ahead of any possible takeover.

A year-to-date analysis shows that the company’s shares have dropped by 48 percent, closing at GBX101.8 last Friday; accordingly the analysts say BT Group’s shares are 13.5 percent in the red since the start of lockdown restrictions in March.