Back in April, when private equity group Blackstone Group bought itself a 4.5% stake in Deutshe Telekom, markets were puzzled. It wasn’t Blackstone’s style it normally went for controlling stakes. Some speculated it had ideas for introducing greater cost controls, but all in all, markets were perplexed.
This weekend, for a while at least, the reason suddenly appeared to become clear. For the German telecom company, said the rumours, was preparing a takeover offer for British Telecom.
The German company, with its valuation of £36.2bn, has almost twice the market capitalisation of BT, valued at £19bn. But the synergies are obvious and a merger would create big cost cutting opportunities. These days, of course, BT doesn’t have a mobile phone network to call its own unlike the German company, which owns T Mobile. But BT does have its global services division, which sells telecom and IT services to corporates. This accounts for 44% of the BT empire, and it’s an asset Deutshe Telekom would love to get its hands on.
Talking of Hans, German investors have been selling shares in Deutshe Telekom of late. Seventeen months ago, or so, shares in the German company were almost 40% up the current price, whereas BT has been hovering around a four year high. Click here to see the BT versus Deutsche Telekom share price chart
And It’s the relatively low value of the larger company’s shares that made the purchase troublesome. And perhaps, that is why the Blackstone’s involvement is so important.
But then, on Sunday, The Telegraph appeared to put an end to the rumours, when it revealed that “members of the German company’s supervisory board would be ‘horrified’ at the idea of an acquisition attempt.”
© Investment & Business News 2013