BT Stocks Jump Amid Rumours Of Hostile Bid

On Monday 24th 2020, shares in BT jumped 6% after it was revealed that the telecoms company is preparing to defend itself against a hostile bid.

Despite being the biggest telecoms group in the UK, the value of BT has significantly decreased recently and is estimated to be worth around £10 billion, its lowest value since the UK’s financial crisis. Many experts, however, are suggesting that this is an undervaluation and the potentially hostile bid is proof that the telecoms giant is worth significantly more. This undervaluation may be good news for the financial market, as it suggests businesses are beginning to gain value once again.

Unknown Rival

A rival, as yet unknown, has seen this slump as an opportunity to take over BT and offer a £15 billion takeover deal, though it seems a formal deal has not yet been officially made. BT has recently hired Goldman Sachs bankers to update its bid defence strategy, seemingly confirming the hostile bid offer.

Such an offer, when it is made, will require government approval as the bidder would take over BT’s pledge to roll out £12 billion worth of fibre broadband to homes in the UK and contribute to building a 5G network. Although no official announcement has been made, experts predict Deutsche Telekom, who holds 12% of BT, may be behind the bid.

Helal Miah, The Share Centre investment research analyst explains:

“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.”

Although the future of BT is wrapped in uncertainty, the jump in their shares today currently puts them in the position of a leading FTSE 100 riser. If BT is bought, the process will no doubt be a lengthy and highly political one.