BT Group stock price soars on a potential £15bln takeover bid

Written by: Michael Harris
August 24, 2020
  • BT Group is reportedly a subject of the £15bn ($19.6bn) takeover bid from rivals
  • The firm has reportedly asked Goldman Sachs to prepare a new defence strategy against a potential takeover
  • BT Group stock price rose nearly 9% today following weekend reports

Shares of BT Group PLC (LON: BT.A) gained around 9% on Monday on weekend reports that the firm may be a subject of the £15bn ($19.6bn) takeover bid. As a result, BT is looking to draft a new defence strategy against the takeover approach. 

Fundamental analysis: Goldman instructed to prepare a defense strategy

BT Group has reportedly asked Goldman Sachs to prepare a new defence strategy against a potential takeover bid from rivals after BT’s stock declined due to the suspension of its dividends.

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According to the reports, BT asked Goldman Sachs to work out a new defence plan against a potential £15bn ($19.6bn) takeover approach, equivalent to 151p a share.

Furthermore, Robey Warshaw LLP, the London-based and Vodafone’s adviser could also be involved. The bank plays a major role in developing the country’s 5G network, following the UK’s decision to ban Huawei’s 5G equipment in the country. 

The British telecommunications company suspended its yearly dividend in 2020 for the first time in 36 years, leaving it with a market cap of only £10bn, which is 50% of the estimated value of its Openreach infrastructure assets.

One of the factors that sent its shares down is because BT Group suspended its dividend in the midst of the pandemic, with its market value dropping by 37.1% over the past year. Given that BT is heavily involved in defence and vital national infrastructure networks, any takeover bids for the company will have to obtain approval by the government. 

A month ago, a UK minister said he will present a bill in autumn that will remodel the country’s approach to national security and foreign investors. Last month, BT’s chief executive officer Philip Jansen urged PM Johnson’s government to not rush into removing Huawei’s contribution in the countrywide 5G network. 

Technical analysis: Shares soar on potential takeover

BT Group stock price rose nearly 9% today following weekend reports. The sellers have managed to erase a portion of gains as the stock price now trades around 5.5% higher. Given the poor performance of the BT Group stock price this year, there’s a huge upside for the stock should investors look to buy BT stock ahead of a potential takeover.

BT Group stock chart (TradingView)

Shares of BT Group plummeted by 48% year-to-date and closed last week at GBX101.8 on Friday. The company’s shares are 13.5% in the red since the start of lockdown restrictions in March. 

Summary

BT Group has approached City advisers to devise a defence strategy against a takeover bid from industry rivals after the telecom giant suspended its dividend, sending its shares to a decade-low.