Communications group TalkTalk confirms £1.11bn takeover offer

Shares jumped by more than 16% in Salford-based communications group TalkTalk this morning following confirmation of a takeover offer.

By 8.30am stock in the business had soared to 97p, valuing the group at £1.11bn.

It followed an announcement just before 8am that it had recently received a preliminary and non-binding proposal from Toscafund Asset Management (TAM) on behalf of funds advised by it, regarding a possible cash offer to be made by a newly-formed company for TalkTalk at a price of 97p per share, together with a full unlisted share alternative.

TalkTalk said its board has considered the terms of the proposal and has agreed to progress it further, along with taking advice from the company’s advisers.

The proposal contains a number of pre-conditions to announcing any firm intention to make an Offer, including, that TAM receives an irrevocable undertaking from TalkTalk founder and executive chairman Sir Charles Dunstone in support of such offer.

It said a further announcement will be made as and when appropriate.

TAM now has until 5pm on November 5, to either announce a firm intention to make an offer for the company, or announce that it does not intend to make an offer.

However, this deadline can be extended with the consent of the Panel on Takeovers and Mergers.

TalkTalk said there can be no certainty that a firm offer will be made by TAM, even if the pre-condition is satisfied or waived.

The business announced it was relocating its headquarters from London to its current Salford base in November 2018, providing a 500-jobs boost for the region.

Russ Mould, investment director at Manchester investment platform AJ Bell, said: “It looks like TalkTalk’s ultimately unhappy stay on the markets could be coming to an end given the positive noises it has given on the 97p per share bid from asset manager Toscafund.

“This is less than a third of the share’s peak level in the mid-2010s and materially below the price it traded at following its demerger from Carphone Warehouse in 2010.

“Having been building in 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.

“Notably, TalkTalk’s potential exit from the UK market comes months after its former parent Carphone Warehouse saw the last of its stores shuttered a few years on from its own merger with Dixons.

“It seems both businesses were eventually left behind by changes in their respective markets and shifting consumer behaviour

“TalkTalk was always positioned as the cheaper alternative to the likes of BT, 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.”