Hedge fund launches £1.1 billion bid to take TalkTalk private

UK ISP TalkTalk has agreed to discuss a takeover bid from its second-biggest shareholder.

Hedge fund Toscafund Asset Management (TAM) currently owns around 28.5 percent of TalkTalk, according to the telco’s most recent annual report. Charles Dunstone remains its single-biggest shareholder, with a stake of 29.8 percent.

On Thursday, TalkTalk confirmed that it received a non-binding, £0.97 per share offer from Toscafund to take the company into private ownership. TalkTalk’s share price was around £0.83 before the offer was announced. The value of its shares peaked at more than £4.00 per share in May 2015, but has been falling ever since.

“The board has considered the terms of the proposal and has agreed to progress the proposal further with TAM along with taking advice from the company’s advisers,” said a statement from Tim Morris, TalkTalk’s general counsel and company secretary.

Under UK regulations, Toscafund has until 5 November to either make a firm offer or walk away.

TalkTalk is the latest on a growing list of European telcos that have attracted bids from private investors.

Spain’s Másmóvil is currently subject to a €3 billion takeover deal from private equity funds Providence, Cinven and KKR. Shareholders representing 86.4 percent of the challenger telco’s shares agreed to back the offer last month.

Also in September, Altice Europe founder Patrick Drahi – who already owns 40 percent of the telco group – made a cash offer of €4.11 per share to take the company private. Altice Europe’s shares had been trading near all-time-highs in February this year, but plummeted when the coronavirus pandemic took hold.

On that note, lockdown has driven demand for home-working, and that demand isn’t expected to decline any time soon. As more people and companies come to rely on home broadband for work as well as leisure, its value should presumably increase.

Private investors have clearly sensed which way the wind is blowing, and are prepared to bet on what they see as a long-term trend.