08 October 2020 10:33

BT Group Takeover Telecommunications

charles dunstone

ONE of the City's takeover kings today launched a £1.1 billion bid for TalkTalk, the business co-founded by mobile phone magnate Sir Charles Dunstone. Toscafund, led by Martin Hughes--nicknamed "the Rottweiler"--has a habit of launching takeover bids for companies it feels are undervalued by the stock market and taking them private. Today's offer of 97p a share in cash for TalkTalk was well received by the board of the telecom company, which said it has "agreed to progress the proposal further". Sir Charles' 30% holding is valued at £330 million, but it is likely he will instead take a stake in the new unlisted company if the deal goes ahead. One banker said: "He is too smart to sell out at the bottom." The stock was well over 300p five years ago.

charles dunstone

Today they jumped 14p to 97p, in line with the bid, indicating the City thinks this is an almost done deal. The talks are "amicable" said a source. TalkTalk chief executive Tristia Harrison is felt to have run the business well since taking over from Dido Harding, the baroness presently under fire as head of the NHS Test and Trace programme. Harrison is likely to remain as CEO if the deal goes ahead. Tosca already owns 29.9% of the company which has lately made inroads as a serious competitor to Sky and Virgin Media.

It is a budget player in a tough market which in the past has suffered from customer service problems and a data breach in 2015 that saw thousands of accounts hacked. TalkTalk got a fine of £400,000 from the Information Commissioner's Office due to the "seriousness of the event". Tosca is also an investor in Ted Baker and the Stobart Group, among many other assets in a portfolio of £4 billion. It is happy to act aggressively against management it thinks are failing. Tosca made a tentative bid for TalkTalk last year at the much higher price of 135p a share, around £1.5 billion. TalkTalk is being advised by Barclays and Deutsche. Toscafund has until November 5 to formalise its bid, but the deal could be done well before then conditional on the support of Dunstone. City analysts think a rival bid, perhaps from Vodafone, is a possibility. Private equity firms, awash with cash, could also be interested. Toscafund previously bought telecom firm Daisy Group, taking it private in 2015. Hughes was a banking analyst who later worked at US hedge fund Tiger before setting up Toscafund in 2000. Image copyright Reuters Shares in telecoms firm TalkTalk have surged 16% after it agreed to consider a takeover bid from investment firm Toscafund that values it at £1.1bn. TalkTalk said that its board had "agreed to progress the proposal further" and would consult advisers. But it added that to make any firm bid, Toscafund would have to get the backing of TalkTalk chairman Charles Dunstone, who owns nearly 30% of the firm. Toscafund already has a similarly sized stake in the company. Toscafund's offer is worth 97p a share, considerably less than a 135p-per-share offer that it reportedly made last year. London-based Toscafund is run by founder Martin Hughes, who is believed to be one of the UK's richest hedge fund managers. His reputation for tenacity in forcing companies to change has earned him the nickname of "the Rottweiler" in City circles. If his takeover succeeds, he will be increasing his presence in one of Europe's biggest and most competitive telecoms markets. The bid comes amid continued dissatisfaction among customers with the level of service they receive from TalkTalk. For the past four years, the firm has been the broadband provider that attracted the most complaints, as recorded by regulator Ofcom. Why did this happen? Please make sure your browser supports JavaScript and cookies and that you are not blocking them from loading. For more information you can review our Terms of Service and Cookie Policy.