TalkTalk endorses £1.1bn offer to take company private

TalkTalk has recommended a £1.1bn offer to take the company private, after its largest shareholder and co-founder, Sir Charles Dunstone, backed the deal.

The deal marks the end of a tumultuous decade as a publicly listed company for the broadband and telecoms company.

The company has been in talks with Toscafund, its second-largest shareholder with a similar-sized stake to Dunstone’s near-30%, about a deal since October. The 97p-per-share offer values the company at £1.8bn including debt.

A senior non-executive director Ian West, representing TalkTalk’s independent shareholders, said the deal was in the best interest of all investors to recognise “immediate value for their shares” as well as taking into account the “risks associated in achieving TalkTalk’s strategic ambitions”.

The offer is well below an approach made last year by Toscafund, which is chaired by Martin Gilbert, pitched at 135p a share but which was not entertained by the board, according to Sky News.

It is also well below the 115p at which TalkTalk demerged from Carphone Warehouse in 2010. At its height in 2015, TalkTalk’s share price hit 415p, valuing the business at almost £4.8bn and Dunstone’s current stake at £1.4bn.

Later that year a cyber-attack resulting in a large-scale breach of customer data rocked investor confidence, and despite improving operations, a tough telecoms market has meant TalkTalk’s share price has never recovered.

The company’s shares traded at more than 150p at the time of the departure of the former chief executive Dido Harding in 2017, and was at 120p in February, shortly before the UK went into a nationwide lockdown because of the coronavirus pandemic.

“As the UK transitions to full fibre we have a hugely challenging, but exciting opportunity,” said Dunstone, who founded TalkTalk in 2004. “Being a private company would allow us to accelerate adoption and focus on our role as the affordable provider of fibre for businesses and consumers nationwide. The Telecoms industry is going through a fundamental re-set and we are keen to play our part in it.”

TalkTalk shareholders have been given the option to take a cash payout or roll their stake into the private company, which Dunstone is electing to do, although it is not yet clear what the size of his final holding will be.

“I am pleased to have the opportunity to continue to be a major shareholder in TalkTalk,” said Dunstone. “My decision underlines my passion for the company and the confidence the senior management team and I have about our journey ahead.”

TalkTalk, which is Britain’s fourth-largest broadband company with 4.2 million users, recently sold its fibre broadband unit to CityFibre.

As the share prices of telecoms companies have fallen, takeovers have become more likely.

In May, the parent companies of the TV and cable company Virgin Media and the mobile operator O2 agreed a £31bn merger in an attempt to create a new “national champion” to challenge BT and Sky in the UK. The deal is being investigated by the UK’s competition regulator.

Dunstone, who co-founded the Carphone Warehouse from which TalkTalk was spun-off, still holds a stake in its successor company, Dixons Carphone.

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