French billionaire Patrick Drahi
(Picture: REUTERS)The UK government is “monitoring” the situation at BT after the French billionaire stalking the business raised his stake to 18%.
Altice UK, a group owned by Patrick Drahi, said it had increase its holding from 12.1% to 18%. Altice bought another 585 million shares in BT on Monday, which would cost just over £1 billion at yesterday’s closing price. Exact transaction costs weren’t given.
Drahi said: “Over recent months we have engaged constructively with the Board and Management of BT and look forward to continuing that dialogue. We continue to hold them in high regard and remain fully supportive of their strategy, principally to play the pivotal role in delivering the expansion of access to a full fiber broadband network; an investment programme which is so important to both BT and to the UK.”
BT said in a brief statement it was aware of Altice’s increased stake and added: “ The Board and management of BT Group will continue to operate the business in the interest of all shareholders and remains focused on the successful execution of its strategy and building on recent performance momentum .”
A spokesperson for the UK government said: “We are monitoring the situation carefully. The Government is committed to levelling up the country through digital infrastructure, and will not hesitate to act if required to protect our critical national telecoms infrastructure.”
Drahi surprised the City when he spent £2.2 billion on BT shares in June. The publicity shy billionaire, who made his name with cable TV in Europe, is known for his deal making. His presence on the share register fueled speculation that he could be eyeing change at BT.
Analysts say a full bid would be difficult given BT’s importance to government broadband policy and the current hostility towards foreign takeovers.
However, Drahi may push for other transactions, such as a long talked about spin-off of BT’s infrastructure arm Openreach.
BT has hired boutique Mayfair advisory firm Robey Warshaw and investment bank Goldman Sachs to help bolster its defenses.
The increase in Altice’s holding comes just days after a self-imposed lock-up period came to an end. Drahi said in June he wasn’t planning on making a bid for BT, a statement that triggered a six month ‘no bid’ period under UK takeover rules. That lock-up period ended on 10 December.
Drahi today said again he is not eyeing a full bid, which triggers a new lock-up period. That can be abandoned if another bidder for BT emerges or there is a “material change of circumstances”. BT shares jumped last month after reports that India’s Reliance Industries was eyeing a bid for the company, reports that Reliance strongly denied.
Shares dropped 8.3p, or 4.7%, to 166.5p today.
Neil Wilson, chief market analyst at Markets.com, said: “I can’t imagine the government would allow BT to be taken over and I think investors are paying close attention to the immediate and very defensive response from the government.”
