Shares in telecoms group TalkTalk (TALK) have jumped almost 17% to 97.1p following news of a 97p per share takeover approach from existing shareholder and specialist asset manager Toscafund.
The shares trading almost dead on the mooted bid level suggests the market doesn’t expect interest from elsewhere.
TalkTalk has received a preliminary and non-binding proposal from Toscafund Asset Management (TAM) on behalf of funds advised by TAM regarding a possible cash offer of 97p per share.
The board has considered the terms of the proposal and has agreed to progress it further with TAM.
The proposal contains a number of pre-conditions to announcing any firm intention to make an offer.
One of these is that TAM receives an 'irrevocable undertaking' from TalkTalk's founder and executive chairman Sir Charles Dunstone in support of such offer, including an election for any unlisted share alternative in respect of his entire holding of ordinary shares in the company.
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It stated: 'These pre-conditions may be waived by TAM in its absolute discretion.' TAM has until 5pm on 5 November 2020 to either announce a firm intention to make an offer or announce that it does not intend to make an offer.
AJ Bell investment director Russ Mould said: ‘Having been building a stake in TalkTalk in recent years Toscafund may have not unreasonably decided it could do a better job of managing the assets itself out of the glare of public markets.
‘TalkTalk was always positioned as the cheaper alternative to the likes of BT (BT.A), Sky and Virgin Media for broadband and other services but ultimately it struggled to gain traction in a highly competitive marketplace and growth has really stalled in recent years. Efforts to create its own nationwide fibre network so it didn’t have to rely on BT’s infrastructure have also failed to come to fruition.
‘Problems of the company’s own making haven’t helped including a high-profile cyber-attack in 2015 which was highly damaging to the brand. Poor ratings for customer service and reliability have also undermined the proposition.’
