TalkTalk has officially accepted a £1.1 billion takeover offer from investment firm Toscafund.
The UK operator and broadband provider has agreed to a bid from its second-largest shareholder that values it at 97p per share.
The news comes a year after the telco rejected a larger bid of £1.5 billion from the same suitor which valued TalkTalk at double its share price - however the company’s board ruled that it did not provide sufficient value to shareholders and customers.
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TalkTalk takeover confirmed
"I am pleased to have the opportunity to continue to be a major shareholder in TalkTalk," Sir Charles Dunstone, TalkTalk's Chairman, said in a statement to the London Stock Exchange.
"My decision underlines my passion for the company and the confidence the senior management team and I have about our journey ahead. That said, as the UK transitions to full fibre we have a hugely challenging, but exciting opportunity. Being a private company would allow us to accelerate adoption and focus on our role as the affordable provider of fibre for businesses and consumers nationwide. The Telecoms industry is going through a fundamental re-set and we are keen to play our part in it."
The deal is still subject to regulatory approval, but if granted, is expected to close on or before March 31, 2021. TalkTalk CFO Kate Ferry will step down as part of the takeover, with Phil Eayres taking her place.
Tosca bids
News of the proposal emerged earlier in 2020, prompting Tosca to comment publicly on the matter. The firm said it understood the reasons why its offer was rejected and reiterated its support for the current board and management, adding that the company was in a much better place than when it made its original bid.
However, over the past year, Tosca has increased its stake in TalkTalk from 19% to 29% - roughly the same as executive chairman Sir Charles Dunstone.
It’s unclear when Tosca’s 2019 bid was made but a possible reason for the lower offer could be the fact that TalkTalk no longer has a fibre network. Last year, the company said it was seeking as much as £1 billion to fund the expansion of ‘FibreNation’ – a wholesale alternative to Openreach for TalkTalk, Sky and other broadband providers. However, FibreNation was sold to CityFibre for £200 million in January.
There has been a surge of interest from private equity firms in telecoms infrastructure in recent times because of the long-term predictable revenues and room for growth.
However, TalkTalk’s customer base of four million customers is still an attractive proposition as the UK market shifts towards convergence and as the company seeks to migrate subscribers from copper to fibre broadband.
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