UK ISP TalkTalk confirms it will MullMull go-private takeover offer valuing it at £1.1bn
- Reference: 1602161231
- News link: https://www.theregister.co.uk/2020/10/08/talktalk_to_consider_takeover_offer/
- Source link:
Toscafund Asset Management, which already owns 30.5 per cent of TalkTalk, is aiming to pay 97 pence per share. That's a premium of 13.5 pence on the previous day's closing price of 83.5, but still short of the 135 pence-per-share reportedly offered last year.
News of the purchase sent TalkTalk's share price surging. At the time of writing, it is trading at 97.7 pence – slightly higher than the offer made by Toscafund.
It is understood that any deal will require the approval of TalkTalk founder Charles Dunstone, who owns 29.7 per cent of the company.
Toscafund manages assets worth £4bn. It owns sizable portions of clothing brand Ted Baker, logistics and aviation firm Stobart Group, and independent healthcare provider Circle Health.
TalkTalk is the [1]fourth-largest UK ISP by subscriber , trailing BT (and associated companies, EE and PlusNet), Sky Broadband, and Virgin Media. In addition to offering fixed-line connectivity, it also offers paid TV services, as well as an MVNO based on O2's network.
Dunstone is believed to have [2]rejected the first offer made in 2019 by Toscafund . Although this new deal is smaller, it comes at a turbulent time for the broadband industry, thus raising the possibility he may accept.
[3]BT currently trades at 105.9p – less than half its 52-week high of 212.25p. Vodafone similarly trades at 111.88 pence – almost two-thirds of its year-long high of 169.46.
Adding to the pressure, the residential and business telecommunications sector continues to consolidate.
Back in May, [4]Liberty Global and Telefónica said they would merge their respective UK telecoms businesses, Virgin Media and O2.
Analyst Megabuyte said of the potential deal: "Toscafund... has, one assumes, decided to swoop with TalkTalk shares at around all-time lows, and well down on the just over 400p achieved in 2015, and with the company valued at little more than an incumbent telco [BT].
"The main question therefore is whether Toscafund's approach flushes out other bidders, both institutional/private equity as well as strategic buyers. The most likely of the latter would be Vodafone."
Consolidation allows providers to increase their subscriber base, but also add additional product lines – and cost "efficiencies", as they euphemistically call them – that makes them more attractive. Using the example of Virgin Media and O2, the combined business would have operations spanning fixed-line, mobile, and paid TV. ®
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[1] https://www.ispreview.co.uk/review/top10.php
[2] https://www.bloombergquint.com/onweb/talktalk-says-it-s-considering-take-private-offer-from-toscafund
[3] https://www.londonstockexchange.com/stock/BT.A/bt-group-plc/company-page?lang=en
[4] https://www.theregister.com/2020/05/07/virgin_media_and_o2_merger/
[5] https://whitepapers.theregister.com/
As Toscafund already own almost 1/3 of TalkTalk, they're obviously figuring that they can't really get any dirtier...
Virgin/O2 Combo
"Back in May, Liberty Global and Telefónica said they would merge their respective UK telecoms businesses, Virgin Media and O2"
The UK's Competition & Markets Authority wants to investigate this, though (it's applied to take it off the EU equivalent, as it's currently under that body's purview), so it might not happen.
Well the service couldn't get any worse..
...could it?
Re: Well the service couldn't get any worse..
The service is great. Cheap, 80/20 24/7, no slowdowns or outages in years.
I pay for the pipe. If that's 100%, what more do I need?
* customer service is crap though!
They probably think they can increase profits by shaving a bit off the running costs.
They certainly don't need that complicated security stuff, get rid of it.
On a slightly different tack..
"Consolidation allows providers to increase their subscriber base, but also add additional product lines – and cost "efficiencies", as they euphemistically call them".
Having privatised BT to break its monopoly and provide competition for the benefit of the consumer it looks like we could be heading for a private monopoly in the telecoms sector, possibly preceded by a powerful private cartel... .
Cynical? Moi? The coat? It's the hoodie with built-in face mask and tinfoil lining...
All you need to ask is
How much DEBT will the new company be saddled with. Vulture (sorry El Reg) Capital companies live by putting debt on the companies they infect with VD (Venture Debt) disease.
They are runining businesses big time.
Perhaps they could bring back good old Dildo to run it as well. After fucking up TalkTalk once, and that monumental public fuckup being the qualification for her to publicy fuckup the Track and Trace fiasco - I can think of no-one more qualified to run the remains of the business into the ground once and for all.
Alternatively...
I was going to suggest that the VCs made the offer for the remaining two thirds now that Dildo has left.
Or they used Excel and the losses didn’t get onto the bottom line.
A pity
I did some work there around the time that Dido went. I got the distinct impression of a bunch of good people who were very worried about any other security issues, and really wanted to do a good job. They were worthy of encouragement.
I bet this deal will go the usual way, private finance extracts their pound of flesh and the company is hung out to dry.
It may depend on Dunstone's attitude: he's not the nicest person, but I got the impression that he actually gives a damn about this baby.
Buying TalkTalk must be asking for paying to have a swim in a septic tank.