- Second- largest shareholder Toscafund Asset Management will buy the network for £1.1bn
- The prospective parent firm could help plug holes in TalkTalk’s expensive long-term growth project
TalkTalk (TALK) has agreed to a £1.1bn takeover by Toscafund Asset Management, an investment firm that is already its second-largest shareholder. The cash offer of 97p a share values the company at a 16 per cent premium to the closing price of its shares on the day before Toscafund first disclosed its offer in October.
The deal is not particularly generous – but arguably fair for a network operator that has struggled with the roll-out of fibre broadband, despite 4.3m customers making it one of the largest internet companies in the UK. This failure has depressed the company’s shares for years now, which have shed more than 50 per cent of their value since 2015. TalkTalk has effectively had a ‘for sale’ sign pinned to its forehead – and it has caught Toscafund’s attention before. According to Sky News, the firm had made an informal offer of 135p a share last year, which was rejected by the board at the time.
Now TalkTalk’s independent directors are recommending the lower offer, as pressure builds on the operator to cough up and invest in its high-speed internet services. Toscafund should be able to offer some support in this area, having dealt with similar scenarios at telecom companies such as Daisy Group, Six Degrees Group and SpiriTel.
We do not think that the public market will grow more forgiving towards TalkTalk, even though it did post some improvements in fibre growth in the half-year results it released on the same day the recommended takeover was announced. Toscafund would make an experienced, and likely well-resourced, partner for TalkTalk. Await documents.
