Telecom companies were boosted yesterday after private equity giant KKR swooped on Telecom Italia with a £9billion offer.
The deal, if approved by the firm’s board and the Italian government, would be one of the biggest European private equity buyouts in history. It would total £28billion, including Telecom Italia’s £19billion debt pile.
KKR’s offer was a 45 per cent premium to Telecom Italia’s closing price on Friday. It sent the company’s shares on the Italian Stock Exchange up 30.2 per cent.
KKR has swooped on Telecom Italia with a £9bn offer which, if approved, would be one of the biggest European private equity buyouts in history
The group said KKR made a ‘friendly’ approach based on public information and it will now do four weeks of due diligence.
The offer raised the prospect of a bidding war as rival private equity firms CVC and Advent said they were ‘open’ to discussions with the company.
It also stirred the prospect of private equity firms approaching other telecom giants – pushing up shares in Vodafone and BT.
AJ Bell investment director Russ Mould said: ‘The Italian deal may stir fresh bid speculation, especially as private equity is cash rich, interest rates are low, money is cheap and such financial buyers are on the prowl for companies that can consistently generate cash.’
Stock Watch – ADVFN
After controversial businessman Dan Horsky raised his stake to 9.7 percent, shares in ADVFN’s financial data website ADVFN shot up by more than 20%
Horsky was sentenced to prison in 2017 after hiding more than $220million in offshore bank accounts and evading US taxes for over $18million over the course of 15 years.
One of three men who are thought to be plotting a takeover is the retired Israeli-born professor of business administration.
Its former director, Yair Tauman, increased his stake to 18.3 percent this year. Ron Izaki has a 4.3% share through a company he controls.
The shares rose 20.4 percent, or 15p to 88.5p.
Vodafone ended up 3.2 percent, or 3.62p at 117.24p. BT saw a gain of 2.5percent, or 4.05p at 164.7p.
Banks saw an increase in confidence due to the possibility of a Bank of England interest rates hike at its December policy meeting.
The Bank kept interest rates at the record low 0.1 per cent this month and Governor Andrew Bailey said at the weekend that the Bank would ‘have to act’ if ‘febrile’ inflation continued.
Mould claimed that banks stocks can be beneficiaries of tighter monetary policies and an increase in the interest rate.
He added: ‘A strong economy should help their profits and ability to return cash to shareholders via dividends and buybacks, too.’
Natwest shares were up by 3.1p or 1.4% at 223.7p. Barclays was up 2p or 3.78p at 194.74p.
HSBC saw a 1.2 percent increase, or 5.25p at 436.95p. The FTSE 100 was slightly higher by 0.4%, or 31.89 point, at 7255.46. The FTSE250 gained 0.3% or 62.79 to close at 23429.7.
Royal Mail shares jumped another 2.9 per cent, or 14.3p, to 512.8p after a bumper set of results last week saw it announce a £400million payout to investors.
Shares in the postal service rose 9.8 per cent on Thursday after it said a surge in parcel deliveries helped it to a £315million profit for the six months to September 26.
Mecca Bingo and Grosvenor Casinos owner Rank agreed a £77.5million VAT refund from the taxman plus £5.5million of interest. The shares fell 0.7% or 1p to 150p.
Technical products supplier Diploma said annual profits soared 44pc from a year earlier to £96.6million.
The FTSE 250 company makes seals for special equipment, controls it and offers a variety of instruments and services to the healthcare industry. It said revenue in the same period rose by 46 per cent to £784million.
Chief executive Johnny Thomson said: ‘Despite market uncertainties, I remain confident in our ability to deliver attractive long-term growth at sustainably high margins.’
Diploma shares fell 8 percent, or 256p to 3460p
Newly-listed electric vehicle charge point maker Pod Point rose 2.5 per cent, or 6p, to 248p after the Government said new homes from 2022 must have electric vehicle charging points installed.
AJ Bell announced that Electrocomponents, a distributor of electronic equipment and Dechra Pharmaceuticals are set to join the FTSE 100.
Electrocomponents’ shares increased by 0.2% or 3p to 1255p. Dechra Pharmaceuticals lost 1.4% or 75p at 5290p.