BT share price forecast as Drahi takeover rumours rise
- The BT share price popped on Tuesday as the company hired Robert Warshaw.
- The company is preparing for a potential bid by Patrick Drahi.
- The French billionaire could make a bid in December this year.
The BT (LON: BT.A) share price did relatively well on Tuesday. It surged by more than 5%, becoming the best performing stock in the FTSE 100 index. It is trading at 143p, which is slightly above this month’s low of 134p.
Will Patrick Drahi make a bid?
A few months ago, Patrick Drahi, the French billionaire, spent billions of dollars buying a stake in BT Group. He is now the biggest investor in the company with a stake worth about 12%.
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At the time, Drahi, who also owns Altice, said that the purchase would be passive. He said that he believed that the company was strong and undervalued.
Now, there is chatter in the market that the billionaire could be about to make a bid for the telecommunication giant. Indeed, the BT share price jumped on Tuesday after the company hired Robert Warshaw in a bid to strengthen its defense against a bid. Warshaw is best known for being the employer of Chancellor George Osborne.
The hiring was notable because it comes close to a December 10th deadline. This date will see Altice released from a commitment about not to launch a takeover bid. Therefore, the management is planning for several scenarios. For example, Drahi could launch a formal takeover bid for the company. He could also call for it to be broken down in a bid to optimize shareholder returns for its Openreach division.
The BT stock price rose because analysts believe that a bid by Altice could lead to a bidding war for the company. For months, there have been rumours that the company could be taken over by private equity companies.
BT has been facing strong competition from other broadband companies like Vodafone. It has also been attempting to sell its sports broadcasting business to DAZN.
BT share price forecast
The daily chart shows that the BT share price has been in a steady downward trend in the past few weeks. The stock has crashed by more than 31% from its highest level this year. As a result, it has moved to the 61.8% Fibonacci Retracement level. It has also moved below the 25-day and 50-day moving averages (MA) while the Relative Strength Index (RSI) has been in a bearish trend.
Therefore, there is a likelihood that the stock will keep falling as investors target the next key support level at 120p.